Nirmala Sitharaman Seeks Multilateral Coordination To Tackle Debt Vulnerabilities

Finance Minister Nirmala Sitharaman on Friday stressed on the need for multilateral coordination to deal with the rising debt vulnerabilities of many developing countries, and welcomed G20 nations' support in building a coordinated global policy on cryptocurrencies.

Sitharaman also sought views on how multilateral development banks like the IMF and World Bank can be strengthened to address shared global challenges of the 21st century while maintaining a focus on Sustainable Development Goals (SDGs) and poverty eradication.

The minister was speaking at the first session of the G20 Finance Ministers and Central Bank Governors (FMCBG) meeting on international financial architecture, sustainable finance and infrastructure. In a separate session on the financial sector, she emphasised on the need to foster tech innovation while balancing associated risks.

"FM highlighted the rising #DebtVulnerabilities in many vulnerable countries and sought views of the #G20 members on #MultilateralCoordination stating that managing global debt vulnerabilities would be crucial for the world economy," the finance ministry said in a tweet.

In December last year, World Bank President David Malpass said the world's poorest countries owed USD 62 billion in annual debt service, a 35 per cent growth over USD 46 billion in 2021, triggering higher risk of defaults. Malpass had also said the low income countries are at high risk of debt distress or are already in it and debt crises are also spreading to middle income countries.

Under the G20 Presidency, India has been pressing for ways to tackle the aggravated debt vulnerabilities facing developing nations mainly on account of the continuing geopolitical tensions and the pandemic. It is feared that if left unaddressed, the mounting debt vulnerabilities of developing nations could trigger global recession and push millions to extreme poverty.

In her closing remarks, Sitharaman welcomed support on crypto assets, especially with regard to building and understanding of the macro-financial implications to inform a coordinated global policy on crypto assets, the ministry tweeted. She also thanked the International Monetary Fund (IMF)  for putting together a comprehensive paper on macro financial implications on crypto assets for deliberation by the G20 FMCBG.

"The Union Finance Minister also underlined the need to coordinate and complement efforts to support responsible technological innovations and safeguard stability of the financial system," the ministry said. Earlier this month, the ministry said the government is engaging with G20 countries to build international coordination on policy approach to crypto assets.

In her speech at the G20 meetings, Sitharaman also invited views of the G20 nations on policy initiatives that can be instrumental in enabling financing for SDGs and ways for mobilisation of timely and adequate resources for climate finance. The minister also spoke about India's priority of financing cities of tomorrow and sought to explore the views of the 20 developed and developing economies on domestic policy experiences with respect to financing inclusive, resilient and sustainable cities of tomorrow.