Call for action. PM flags threat of unviable debt to stability of nations

Prime Minister Narendra Modi on Friday flagged the threat of unsustainable debt levels to the financial viability of many countries even as he urged G20 member nations to focus on the most vulnerable citizens of the world and strengthen multilateral development banks to meet global challenges.

Modi was addressing the inaugural session of the Finance Ministers and Central Bank Governors’ (FMCBG) meeting under India’s G20 presidency. The first Ministerial-level dialogue will be spread over multiple sessions aimed at fostering global economic cooperation.

The PM underlined that the progress on sustainable development goals is slowing down as the world population has crossed 8 billion. “We need to collectively work to strengthen multilateral development banks for meeting global challenges like climate change and high debt levels,” he said.

Rising tensions

The PM also spoke about multiple challenges, including the rising geopolitical tensions in different parts of the world, but did not make any direct reference to the Russia-Ukraine war which has figured prominently in US Treasury Secretary Janet L Yellen’s pronouncements at the meeting.

Prime Minister Narendra Modi addresses Finance Ministers and Central Bank Governors at the G-20 financial conclave in Bengaluru, through a video message, on Friday

The shadow of the war was visible in the differences that emerged on Friday in the framing of the communique that is to be adopted by the inter-Miniterial dialogue. The French Minister of Economy, Bruno Le Maire, asserted that France strongly condemned the war and there should be no step back from the Bali declaration. Modi, however, made no direct comment on the war.

“We are also witnessing rising geopolitical tensions in different parts of the world. There are disruptions in global supply chains. Many societies are suffering due to rising prices. And, food and energy security have become major concerns across the world,” he said.

Eroding trust

Modi said the trust in global financial institutions has eroded and there is a need for reform as well as to take inspiration, especially from the vibrancy of an economy like India.

“The trust in international financial institutions has eroded. This is partly because they have been slow to reform themselves. It is now up to you — the custodians of the leading economies and monetary systems of the world — to bring back stability, confidence and growth to the global economy. It is not an easy task. I hope that you will draw inspiration from the vibrancy of the Indian economy. Indian consumers and producers are optimistic and confident about the future. We hope that you will be able to transmit the same positive spirit to the global economy,” Modi said.

Digital finance

Without mentioning cryptocurrency, Modi said while the technology is getting increasingly dominant in the world of finance, some recent innovations in digital finance also pose risks of destabilisation and misuse. He said India’s own experience can be a model for exploring the power of technology for good.

“Examples like UPI can be templates for many other countries, too. We would be happy to share our experience with the world. And, the G20 can be a vehicle for this,” he said.