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Review IMF clauses: India

Our Bureau

NEW DELHI, April 30

INDIA has made out a strong case for reviewing conditionality clauses by the International Monetary Fund (IMF) as its design had given rise to serious problems of proliferation and intrusiveness with respect to national ownership of Fund-supported progra mmes in member-countries.

The call for a review was made by the Finance Minister, Mr Yashwant Sinha, in his address at the International Monetary and Financial Committee meeting in Washington on Sunday. Having brought about sweeping changes in the Fund facilities, including raisi ng the rate of charge, and shortening repayment schedules, it would only be appropriate to bring in the much-needed streamlining in conditionality with accent on parsimony, he said.

The review of conditionality should encompass the entire gamut of performance criteria, prior actions, conditions for the completion of reviews and structural benchmarks. The culmination of this effort should help the Fund to focus upon its core areas of expertise and comparative advantage relating to monetary, fiscal and financial policies, rather than extending its reach to a broad range of policies relating to social, poverty and governance issues, according to Mr Sinha.

The Finance Minister also wanted the Fund to ensure that the conditionality should focus on structural reforms vital for attaining key policy objectives. Structural benchmarks should be used more sparingly and the Fund should be more cautious in advocati ng other less important reforms.

``The Fund should also venture into areas outside its core responsibility and mandate only if they are critical to the achievement of key macroeconomic objectives. This will possibly require development of a structured framework for co-ordination in cons ultation with other multilateral agencies,'' he told the meeting.

Mr Sinha also raised the issue of money laundering and financial abuse globally. The joint initiatives of the IMF and the World Bank in this regard could be strengthened by providing technical assistance to countries for developing capacity in tackling m oney laundering and by creating greater awareness regarding various forms of financial abuse. -- See also page 8