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<ul><li><keyword id="4227452" type="General" weightage="80" keywordseo="georgieva" source="Orion">Georgieva</keyword> noted that an integrated economy led to the tripling of the <keyword id="72243" type="General" weightage="20" keywordseo="WORLD-ECONOMY" source="Orion">world economy</keyword> in the last decades. </li><li>Georgieva said that a simulation showed that for advanced economies, global economic fragmentation would mean a loss of 2 per cent of output. </li><li>That was also a message coming from small advanced economies, Georgieva noted. </li></ul> There is a risk of geopolitical fragmentation, as geopolitics turn into geo-economics with negative impacts, warns International Monetary Fund (<keyword id="6355408" type="General" weightage="100" keywordseo="imf" source="Orion">IMF</keyword>) Managing Director Kristalina Georgieva. "Emerging markets and developing countries have stressed that for them, it is paramount that they have the opportunity to drive growth and employment on the basis of a more integrated global economy," Georgieva said at a press conference during the IMF and <keyword id="6354424" type="General" weightage="20" keywordseo="world-bank" source="Orion">World Bank</keyword> annual meetings in response to a question from <keyword id="106387" type="General" weightage="20" keywordseo="xinhua-news-agency" source="Orion">Xinhua news agency</keyword>. That was also a message coming from small advanced economies, Georgieva noted, referring to the meeting of the International Monetary and Financial Committee (<keyword id="165152" type="General" weightage="20" keywordseo="imfc" source="Orion">IMFC</keyword>), the policy advisory committee of the IMF Board of Governors. "The predominant mood in the room was we cannot possibly allow fragmentation to happen because everybody would be poorer, but it would be devastating for low-income and, for emerging markets and developing economies," said the IMF chief. Georgieva said that a simulation showed that for advanced economies, global economic fragmentation would mean a loss of 2 per cent of output, while for emerging markets and developing economies, it could be 10 to 15 per cent. Nadia Calvino, Spain's first vice president and minister for economy and digitalization, who is the chair of the IMFC, also highlighted the risk of fragmentation. In the Chair's Statement of the 46th Meeting of the IMFC, Calvino said the global economy is subject to increased fragmentation risks and the IMFC reiterates its call for greater international cooperation to prevent fragmentation and safeguard global economic integration. Looking back, Georgieva noted that an integrated economy led to the tripling of the world economy in the last decades, in which emerging markets and developing economies quadrupled, and advanced economies doubled. "So if we want to have a secure future, we do need to retain that efficiency that comes from an integrated economy," she added. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/bajaj-autos-q2-net-profit-up-20-but-analysts-expect-more-pain-in-exports/articleshow/94863948.cms">Bajaj Auto’s Q2 net profit up 20% but analysts expect more pain in exports</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/5-3-bn-mobile-phones-will-become-waste-this-year-warn-experts/articleshow/94859499.cms">5.3 bn mobile phones will become waste this year, warn experts</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/tvs-motor-becomes-more-valuable-than-its-peer-hero-motocorp/articleshow/94863107.cms">TVS Motor becomes more valuable than its peer Hero MotoCorp</a>

IMF chief warns of risk of geopolitical fragmentation

The decline in <keyword id="495625" type="General" weightage="20" keywordseo="indias-foreign-exchange-reserves" source="Orion">India's foreign exchange reserves</keyword> is largely due to the valuation changes arising from an appreciating US dollar, Union Finance Minister Nirmala Sitharaman said. She made the remarks while addressing the International Monetary Finance Committee (IMFC) during the ongoing annual meeting of the World Bank and the International Monetary Fund (IMF) here on Friday. "India's foreign exchange reserves at USD 537.5 billion as on September 23, 2022, compare favourably with most peer economies. Two-thirds of the decline in reserves is due to valuation changes arising from an appreciating US dollar and higher US bond yields," Sitharaman said. Indeed, there has been an accretion of USD 4.6 billion to the forex reserves in Q1:2022-23 on a balance of payments (BoP) basis. Other external indicators like net international investment position and short-term debt also indicate lower vulnerability, she said. In fact, <keyword id="15261819" type="General" weightage="20" keywordseo="Indias-external-debt-to-GDP-ratio" source="Orion">India's external debt to GDP ratio</keyword> is the lowest among major emerging market economies (EMEs), she added. India's forex reserves dropped by USD 4.854 billion to USD 532.664 billion as on September 30, according to the Reserve Bank of India (RBI). The drop in the reserves for the week that ended on September 30 was on account of a dip in the Foreign Currency Assets (FCAs), a major component of the overall reserves, the Weekly Statistical Supplement released by the RBI stated. According to Sitharaman, elevated imported inflation pressures remain an upside risk for the future trajectory of inflation, amplified by the continuing appreciation of the US dollar. Indeed, inflation has ruled at or above the upper tolerance limit of 6 per cent since January 2022, she said. In this context, Sitharaman said, calibrated withdrawal of monetary accommodation has continued to restrain broadening of price pressures, anchoring of inflation expectations and containing the second-round effects. India is better placed than many other advanced or emerging market economies, she said. In this tumultuous global environment, India's external financing position remains comfortable despite the widening of the current account deficit (CAD) to 2.8 per cent and the trade deficit to 8.1 per cent in Q1:2022-23, the minister said. The higher trade deficit is expected to be offset by growing exports of services and increasing remittances. Overall, CAD is projected to be within 3 per cent of the GDP. With portfolio flows stabilising and foreign direct investment (FDI) remaining strong, this order of deficit is financeable, she said. Turnaround of the corporate sector as also of the banking sector provides a buffer for absorbing risks in the economy. In the pre-pandemic phase, these sectors were suffering from the twin balance sheet problem. Restitution of their balance sheets has been a priority, she added. Sitharaman said the soft interest rates regime during the COVID-19 years helped corporates restructure their debt and reduce interest costs. Their debt-equity ratios have since fallen to 0.5. The reduction of corporate tax rate in the pre-COVID-19 phase also helped the corporates absorb the pandemic shock. Similarly, the banking sector has posted six-year lows on non-performing assets (NPAs) and slippage ratios, while capital to risk-weighted assets ratio (CRAR) and provision coverage ratio (PCR) have moved up, she said. India also sees strong credit growth at 15 per cent in September 2022. The total resource flow to the corporate sector so far is five times that of last year's mobilisation, mainly by way of bank credit, CPs and FDI, she said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/bajaj-autos-q2-net-profit-up-20-but-analysts-expect-more-pain-in-exports/articleshow/94863948.cms">Bajaj Auto’s Q2 net profit up 20% but analysts expect more pain in exports</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/tvs-motor-becomes-more-valuable-than-its-peer-hero-motocorp/articleshow/94863107.cms">TVS Motor becomes more valuable than its peer Hero MotoCorp</a>

India's forex reserve declined due to dollar appreciation: FM

By Lalit K Jha Washington, Apr 18 () Countries have taken fiscal measures and central banks together injected a total of whopping USD 14 trillion as part of their efforts to mitigate the challenges posed by the novel coronavirus pandemic, the International Monetary Fund has said. "The IMF's policy tracker shows that fiscal measures so far have amounted to about USD 8 trillion and liquidity injections by central banks amounting to over USD 6 trillion," Lesetja Kganyago, chairman for the International Monetary and Financial Committee (IMFC), told reporters during a news conference on Friday. "However, we all agreed, exchange rate and liquidity pressures remain important challenges." Observing that the coronavirus disease (COVID-19) had presented all with significant and potentially daunting challenges, Kganyago said the international community was far from declaring victory on the outcomes or the outlook. "Yet we are convinced that an aggressive response coordinated through the IMF will lead to more positive economic and humanitarian results than would otherwise be possible," he said. "Beyond the serious human impact of the pandemic, we agreed today that the economic repercussions will be severe, particularly for emerging markets and developing countries, commodity exporters and economies with weak health systems," Kganyago said. "A global recession and severe uncertainty have now gripped our societies. Most of us have taken extraordinary measures to support health systems and affected workers and businesses," he said. During the meeting, he said the IMFC reviewed and supported the package of financial support that the organisation had quickly put together in the wake of the deadly COVID-19. The IMF's crisis response initiatives -- outlined in the IMFC communique -- are critical features of efforts to contain the impact of COVID-19, the official said. The fund has revamped the toolkit by doubling access levels to emergency facilities, expanding the use of precautionary lines, establishing a news short-term liquidity line and considering other options to help countries meet their financing needs. According to Kganyago, the IMFC, including donor countries, agreed on the importance of ensuring that the IMF could support its poorest and most vulnerable members. The meeting, welcomed the coordinated approach agreed by the G20 and the Paris Club for a time-bound suspension of debt service payments by bilateral official creditors for the poorest countries that request forbearance. It also encouraged private creditors to participate on comparable terms as well, Kganyago said. IMF managing director Kristalina Georgieva said there was unanimous support of the membership for the doubling of access to emergency financing, which meant some 50 countries would received help that by the end of this month. The IMF has requests from 102 countries. "We are able to step up support for our poorest members. We now have more resources for our Catastrophe Containment and Relief Fund with, now, the UK, Japan, China, the Netherlands, and in addition as of today, Germany, helping us to boost capacity to over USD 600 million," she said. The IMFC called on the membership to urgently provide USD 17 billion of concessional financing for its poverty reduction and growth trust. During the meeting, they received 70 percent of the commitments from members. LKJHMB

COVID-19: Global fiscal measures, liquidity injections near USD 14 trillion, says IMF

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IMF chief warns of risk of geopolitical fragmentation

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India's forex reserve declined due to dollar appreciation: FM

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COVID-19: Global fiscal measures, liquidity injections near USD 14 trillion, says IMF

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