India’s Finance Minister, Nirmala Sitharaman, has called for fair and accurate sovereign ratings for emerging markets and developing economies (EMDEs). Speaking at the International Monetary Fund’s (IMF) 2024 Annual Meeting in Washington, D.C., she emphasized that these ratings should truly reflect the economic fundamentals of these countries.
At the IMFC Plenary session on the “Managing Director’s Global Policy Agenda,” Sitharaman highlighted the importance of accurate sovereign ratings. She said this would ensure fair access to capital and help EMDEs attract private investment. “There is a need for sovereign ratings to adequately account for EMDEs’ economic fundamentals to ensure the cost of capital for them and their ability to attract private capital is factored in,” she stated.
Sitharaman also urged credit rating agencies to improve their methodologies. She wants them to better capture a country’s ability to repay debts and its economic resilience. The Ministry of Finance shared this message on social media, noting her call for improved rating methods that reflect a nation’s willingness and capacity to repay.
In addition, the Finance Minister called for governance reforms within the IMF and other global institutions. She pointed out that the IMF’s role has expanded significantly over its 80-year history. Adapting its governance structures is crucial to align with the evolving global economic landscape. The Ministry of Finance echoed her remarks, stating that the current global order requires such reforms.
Discussing the global economy’s outlook for 2024, Sitharaman praised its resilience but warned of ongoing risks. She noted that while some major economies are nearing their potential output and inflation rates are approaching central bank targets, there are still concerns. Geopolitical tensions and weak medium-term global growth prospects pose downside risks.
She expressed support for the IMF’s Global Policy Agenda, which focuses on achieving a “soft landing” for the global economy and breaking free from cycles of low growth and high debt. Sitharaman emphasized the IMF’s critical role in providing policy guidance, especially for countries facing debt challenges. She stressed that the IMF’s advice should be applied fairly across all member nations to ensure equity.
Finally, Sitharaman commended the IMF’s efforts to foster unity in a fragmented world. She encouraged the institution to remain adaptable in areas like surveillance, lending, and capacity development to better serve its members.
