Dr. Amunugama, Indian Finance Minister Chidambaram hold talks in Tokyo

By Nisthar Cassim in Tokyo

Senior Minister for International Monetary Cooperation Dr. Sarath Amunugama this week held talks with India’s Finance Minister Dr. P. Chidambaram on the sidelines of the IMF-World Bank 2012 Annual Meetings currently on in Tokyo.

Heading the Lankan delegation for 2012 Annual Meetings, Amunugama met Chid-ambaram, who is also the Chairman of Ministers of the Intergovernmental Group of Twenty-Four (G-24) on International Monetary Affairs and Development, ahead of its 88th meeting in Tokyo.

“We had very fruitful discussions on bilateral and multilateral matters. Progress of some of the measures and projects aimed at boosting bilateral ties as well as a few outstanding issues were discussed,” Dr. Amunugama told the Daily FT, which is among global media covering the 2012 Annual Meetings at the sprawling Tokyo International Forum building.

Dr. Amunugama also held separate meetings with World Bank’s new Chief Economist Kaushik Basu and World Bank’s Vice President South Asia Region Isabel Guerrero, in addition to speaking at the roundtable discussion chaired by World Bank Managing Director Sri Mulyani Indrawati on ‘South Asia and The Global Economic Crisis: Can Regional Cooperation Buffer Volatility and Enhance Growth?’ Among other meetings attended by Dr. Amunugama were G-24 Ministers and Governors meeting on Thursday.

Amunugama also attended the plenary session of the IMF-World Bank 2012 Annual Meetings on Friday, at which Japan’s Crown Prince Naruhito was the Chief Guest.

The Lankan delegation to the Annual Meeting includes Central Bank Governor Nivard Cabraal, Finance Ministry’s External Resources Director General M.P.D.U.K. Mapa Pathirana, Department of Fiscal Policy Director General K.M.M. Siriwardana, IMF Alternative Executive Director K.D. Ranasinghe, Central Bank Deputy Governor Dr. P.N. Weerasinghe, Deputy Governor, Central Bank’s Chief Economist S. Gunaratne, Superintendent of Public Debt Dhammika Nanayakkara, and Sri Lanka’s Ambassador in Japan Admiral Wasantha Karannagoda.

The G-24 comprises a host of nations from Asia, Africa and Latin America including Brazil, Mexico which was elected as the new Chair of the Group), India, Iran, South Africa, Egypt, Pakistan, Philippines and Argentina. The meeting of Ministers was preceded by the 100th meeting of the G-24 Deputies with IMF Executive Director for Bangladesh, Bhutan, India and Sri Lanka Arvind Virmani as Chair. IMF Managing Director Christine Lagarde and World Bank President Jim Yong Kim were special guests at the G-24 Ministers’ meeting.

Dr. Amunugama said current uncertainty and downturn in global economy and its impact on G-24 member countries, fast-tracking of quota and governance reforms in the IMF and a much larger long-term financing support for infrastructure development figured prominently in the Ministerial discussion. Key recommendations towards addressing these issues were also made.

In a post-meeting communiqué, the G-24 said it was seriously concerned about the fragility of the global economic and financial situation, particularly in view of low growth and continued uncertainties and risks within the Euro area, notwithstanding the recent policy actions and the buttressing of firewalls, as well as risks from possible aggressive fiscal tightening in the United States. Moreover, instability in financial markets, fiscal adjustments and deleveraging by banks has impacted growth, with adverse affects on the economies of many emerging market and developing countries (EMDCs).

G-24 called on advanced economies (AEs) to take decisive steps towards addressing the policy uncertainties that are impeding the restoration of confidence. It also believes that immediate and concerted action is needed to boost global growth through appropriate macroeconomic policies, the promotion of open trade and investment, the repair of financial sectors, particularly in the major financial centres and vigorous structural reforms, while preparing the foundations for credible medium-term fiscal consolidation, once the recovery is on a sound footing.

It repeated the need for AEs to adopt policies that reduce volatility of capital flows and speculation in commodity prices, while resisting protectionism and phasing out export subsidies.

It also called for concerted actions to mitigate excess volatility in commodity prices, especially in food and energy, which is adversely affecting all countries and more particularly the poor and vulnerable segments of our populations.

Whilst urging quota and governance reforms on a full and timely basis, the G-24 said it was concerned that the 2010 IMF quota and governance reforms did not achieve the required voting power majority for approval by the deadline set of the Annual Meetings of October 2012. “This can result in serious reputational risk for the Fund,” the G-24 said.

“We are concerned that World Bank lending is projected to decline at a time when many of our countries require stepped-up and longer-term financing at affordable cost. We reiterate our call for new solutions to bolster the financial capacity of the World Bank and IFC, including a discussion by the shareholders on the adequacy of their capital,” it added.

It also welcomed the increased attention being paid by the bank to remain engaged with Middle-Income Countries (MICs) to both serve their own development needs and to draw upon their capacity as development partners.

“We take note of the proposal to review the bank’s instruments, knowledge and finance to find innovative ways to support and partner with client countries to advance the global goals of poverty reduction and sustainable development. We urge the bank to improve the flexibility and responsiveness of its policies and instruments. We also recognise the heightened engagement of the IMF with small middle-income countries,” G-24 said in a lengthy communiqué.

The need for broader international support for Arab countries’ reform efforts was also stressed and the IMF and World Bank were urged to step up their analytical work, policy advice, technical assistance, training and financial support to the Arab countries in transition.

G-24 also called on the IMF and the World Bank to provide adequate support to countries and regions affected by food shortages and other calamities, including in the Sahel.