India for bigger, bolder ADB to bring about better results
Growth hurdles in focus at governors’ talks; board highlights challenges before world
The impact of monetary policies of developed economies, de-globalization and slowing Chinese demand on growth in the Asia-Pacific region dominated discussions at the Asian Development Bank’s (ADB) annual meeting of the board of governors on Sunday.
ADB board of governors meeting in the Georgian capital, including its largest shareholders Japan and the US, shared their expectations of the development bank and highlighted the challenges impacting the world economy and the Asia-Pacific in particular, where they said urgent action was needed.
Finance minister Nirmala Sitharaman did not attend the meeting amid the ongoing national polls, but an official representing New Delhi highlighted the need for a “bigger, and bolder ADB” saying it can produce better results.
The official said India hoped the ADB’s new operating model will result in better operational efficiencies and significant reduction in the time it takes to process loans. India also expects the ADB to help members in catalyse significant private sector investments, especially for climate financing.
Alexia Latortue, the US assistant secretary for international trade and development, said the Asia-Pacific region faces risks to its momentum that merit close attention. These risks included tighter global financial conditions, slowing domestic demand in China, and high debt levels, as per a statement shared by ADB. It shared the Governors’ statements with the disclaimer that the views expressed did not necessarily reflect the views and policies of the bank.
The International Monetary Fund last month projected China would grow at 4.6% in 2024 and India at 6.5% in FY25 even as the global economy managed a 3.2% growth in the current and next financial years.
The Chinese official on the board of governors, Lan Fo’an, however, said China was “fully confident” it will achieve 5% economic growth this year and will “continue to inject more certainty into the recovery and stable development of the world economy.”
According to the IMF’s World Economic Outlook released last month, China has been hit by the long-running downturn in its property sector. Credit booms and busts never resolve themselves quickly, and this is no exception, the report said, adding that China’s domestic demand will remain lacklustre for some time unless reforms address the root cause.
Lan suggested the ADB promote trade and investment liberalization and oppose protectionism and various forms of “decoupling and chain breaking” in order to maintain the stability and smoothness of regional industrial and supply chains. China’s statement comes at a time many global businesses are exploring diversifying from China for manufacturing operations while geopolitics continues to put pressure on supply chains.
Raising tax revenue for achieving sustainable growth and developing bond markets also figured in the discussions. Japan referred to the ADB’s assistance to governmentsinexpandingtheirtaxrevenueandsaiditwasimperativetopromote the steady implementation of international taxation initiatives, such as the Organisation for Economic Cooperation and Development’s (OECD) two-pillar approach, in Asia-Pacific countries. The effort of OECD and G20 nations is to curtail tax avoidancebymultinational enterprises and unhealthy competition among nations to attract capital by lowering taxes. Over 130 countries have already signed up for a deal to implement a global minimum corporate tax rate of 15% and individual nations are rolling out domestic laws in this regard.
The reporter is in Tbilisi at the invitation of ADB.
4.6% IMF’s projection for growth in China in 2024
5% Growth a Chinese official projected at ADB meet