IMF SHOULD HELP WHEN COUNTRIES ARE IN DEBT TROUBLE

The IMF must play a key role in simultaneously recommending reforms and supporting countries in restoring debt sustainability when they are drowning in debt, Finance Minister Mangala Samaraweera said.

“To complement that, we are pressing for better international tax cooperation to combat illicit flows of funds. And we call on developed nations to live up to their development finance commitments to assist developing nations,” he said.

He said this in an interview prior to leaving for Indonesia to attend the annual gathering of the International Monetary Fund (IMF) and World Bank.

The minister will attend the gathering as the chair of the Groups of 24 developing nations, which is active in lobbying international institutions on issues of concern in the global economy, the Ministry said.

Minister Samaraweera said there is a tendency to frame the high debt issue as only one of emerging markets but many developed nations — Italy, Japan, the US — also have high debt. “The difference is they have higher revenues and deeper financial markets so they have more options than poorer countries and when an economic squeeze comes emerging markets are hit earlier and harder when markets begin to doubt their ability to repay.

It is crucial to remember that every individual and nation faces needs greater than their income. There always is a temptation to borrow but we have to temper that with institutions and laws that slow down the accumulation of debt, assure transparency around debt terms and purposes, ensure that money to be borrowed goes to practical purposes that are a net boost to the whole economy,” he said.