International Monetary Fund

Context:

IMF cuts India’s growth forecast to 6.8% this year.

Relevance:

GS II: International Relations

Dimensions of the Article:

1. Key points:
2. About International Monetary Fund (IMF)
3. Functions of the IMF

Key points:

• According to the International Monetary Fund. The world, including India, will experience an overall slowdown in the next year owing to
  • Impact of the Russia-Ukraine war
  • Tightening monetary conditions globally
  • Highest inflation in decades
  • Lingering effects of the pandemic
• India is projected to grow at 6.8% in the current fiscal year, following 8.7% growth in fiscal year that ended March 31 as per figures released in the IMF’s October 2022 World Economic Outlook
• Growth rate for this year for India has been revised downward by 0.6 percentage points relative to the IMF’s June 2022 forecast, following a weaker output in the second quarter, and subdued external demand, the IMF said.
• The forecast for the next fiscal year remains unaltered at 6.1%.

About International Monetary Fund (IMF)

• The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C.
• It consists of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. It periodically depends on the World Bank for its resources.
• Through the fund and other activities such as the gathering of statistics and analysis, surveillance of its members’ economies, and the demand for particular policies, the IMF works to improve the economies of its member countries.

Functions of the IMF

• To provide financial assistance to member countries with balance of payments problems, the IMF lends money to replenish international reserves, stabilize currencies and strengthen conditions for economic growth.
• Countries must embark on structural adjustment policies monitored by the IMF.
• It oversees the international monetary system and monitors the economic and financial policies of its 189 member countries.
• As part of this process, which takes place both at the global level and in individual countries, the IMF highlights possible risks to stability and advises on needed policy adjustments.
• It provides technical assistance and training to central banks, finance ministries, tax authorities, and other economic institutions.
  • This helps countries raise public revenues, modernize banking systems, develop strong legal frameworks, improve governance, and enhance the reporting of macroeconomic and financial data.
  • It also helps countries to make progress towards the Sustainable Development Goals (SDGs).

-Source: The Hindu