Russia’s economy has defied expectations, growing by 4.4 percent in the first seven months of 2023 despite facing multiple western sanctions. This is significantly higher than the 3.2 percent growth forecasted by the IMF.

Russia's GDP Soars Amid Rising Defence Spending

It is within this fiscally tight macroeconomic context that governments have to navigate multiple competing priorities against an increasingly complicated backdrop. "Public debt and deficits are increasing to dangerous levels, global growth is slowing, and interest-rate trajectories remain uncertain," argues Vitor Gaspar, Director of the International Monetary Fund's (IMF) fiscal affairs department.

He detailed his views on the platform of "Foreign Policy". The current economic environment reminds him of the early part of the 1980s' economic chaos, especially in the aftermath of an intensive anti-inflation program.

But things are very different in the contemporary scenario. Conceding alongside these other variables are the mega-existing worldwide issues such as climate change an aging population and persisting challenges of poverty and inequality. This will only keep hounding the government kitty. Public demand for fiscal restraint has declined in the last two decades; populism has contributed to a weakened call for government financial discipline.

The three challenges that governments globally need to deal with<o:p></o:p>

This has created a fiscal policy trilemma. There are three conflicting pressures governments have to choose from. There are growing demands for increased spending on areas such as defense and climate action; they cannot increase taxes; and countries need to address the rising public debt and deficits threatening financial stability.

These three constraints are difficult to square. For instance, a government can choose to reduce its debt but refuse to introduce tax rises. Then it would have to slash public spending and in most cases, this is far from being a highly popular move. Ultimately, it results in social and political disruptions. It can spend more without raising taxes, further surging down the debt and deficits and thus threatening fiscal health. Even the most developed and developing economies are fighting this complex tug of war.

It is to be noted that, in the early 1980s, similar fiscal challenges were faced by emerging markets. Further, if things are not managed properly by the leading economies, then it can trigger another global debt crisis. This is the challenge policymakers are faced with; but how do they navigate this course without repeating history?

Over the 80 years of its existence, much has transformed in the IMF's world of international macroeconomics. From Keynesian principles calling for an interventionist regime in macroeconomics, the IMF has experienced many changes and shifts. Inflation sprees in the 1970s and early 1980s created a new challenge, focusing on the independence of monetary policy by inflation targeting, as in New Zealand since 1989.

Such is the nature of economic thought, and this has contributed to a change in policy around Europe to adopt monetary union frameworks. While fiscal policy continues, at least in structural areas concerning topics like inequality and growth, as central, it was no longer nearly the business cycle stabilizer of yesteryear. To successfully work under such pressures governments must operate within the framework of a fiscal policy and focus on resolving the current trilemma by taking proper steps. 

&nbsp;

It is within this fiscally tight macroeconomic context that governments have to navigate multiple competing priorities against an increasingly complicated backdrop.

It is within this fiscally tight macroeconomic context that governments have to navigate multiple competing priorities against an increasingly complicated backdrop. "Public debt and deficits are increasing to dangerous levels, global growth is slowing, and interest-rate trajectories remain uncertain," argues Vitor Gaspar, Director of the International Monetary Fund's (IMF) fiscal affairs department. He detailed his views on the platform of "Foreign Policy". The current economic environment reminds him of the early part of the 1980s' economic chaos, especially in the aftermath of an intensive anti-inflation program. But things are very different in the contemporary scenario. Conceding alongside these other variables are the mega-existing worldwide issues such as climate change an aging population and persisting challenges of poverty and inequality. This will only keep hounding the government kitty. Public demand for fiscal restraint has declined in the last two decades; populism has contributed to a weakened call for government financial discipline. The three challenges that governments globally need to deal with This has created a fiscal policy trilemma. There are three conflicting pressures governments have to choose from. There are growing demands for increased spending on areas such as defense and climate action; they cannot increase taxes; and countries need to address the rising public debt and deficits threatening financial stability. These three constraints are difficult to square. For instance, a government can choose to reduce its debt but refuse to introduce tax rises. Then it would have to slash public spending and in most cases, this is far from being a highly popular move. Ultimately, it results in social and political disruptions. It can spend more without raising taxes, further surging down the debt and deficits and thus threatening fiscal health. Even the most developed and developing economies are fighting this complex tug of war. It is to be noted that, in the early 1980s, similar fiscal challenges were faced by emerging markets. Further, if things are not managed properly by the leading economies, then it can trigger another global debt crisis. This is the challenge policymakers are faced with; but how do they navigate this course without repeating history? Over the 80 years of its existence, much has transformed in the IMF's world of international macroeconomics. From Keynesian principles calling for an interventionist regime in macroeconomics, the IMF has experienced many changes and shifts. Inflation sprees in the 1970s and early 1980s created a new challenge, focusing on the independence of monetary policy by inflation targeting, as in New Zealand since 1989. Such is the nature of economic thought, and this has contributed to a change in policy around Europe to adopt monetary union frameworks. While fiscal policy continues, at least in structural areas concerning topics like inequality and growth, as central, it was no longer nearly the business cycle stabilizer of yesteryear. To successfully work under such pressures governments must operate within the framework of a fiscal policy and focus on resolving the current trilemma by taking proper steps.

Navigating the global fiscal trilemma: Spend more, tax less, manage debt

A recent IMF study examining 65 countries over six decades reveals a striking trend: Political parties across the spectrum are increasingly advocating for higher government spending. This shift challenges traditional notions of conservative fiscal policy. It also highlights a growing consensus on expansionary approaches. Take a look at this report for more.

Political Parties Show Increased Support for Public Spending

The International Monetary Fund is ready to discuss its controversial $2.9 billion bailout programme for Sri Lanka with the country's new government, a spokesman said.

Anura Kumara Dissanayake, sworn in Monday as the country's first leftist president, has said he wants to renegotiate the deal, which has brought unpopular austerity measures.

"We look forward to working together with President Dissanayake... towards building on the hard-won gains that have helped put Sri Lanka on a path to economic recovery," an IMF spokesperson in Washington said Monday.

The lender of last resort noted that the South Asian nation, which defaulted on its debt in April 2022, had stabilised since the bailout.

"We will discuss the timing of the third review of the IMF-supported programme with the new administration as soon as practicable," the spokesperson said referring to the periodic review of the bailout.

A senior aide of the new president told AFP a day after the election that his People's Liberation Front party will "not tear up" the IMF deal.

"Our plan is to engage with the IMF and introduce certain amendments," Bimal Ratnayake said.&nbsp;

"We will not tear up the IMF programme. It is a binding document, but there is a provision to renegotiate."

Sri Lanka's tiny stock market fell sharply within the first few minutes of trading on Monday, when Dissanayake took office, but recovered quickly and ended the day with the main All Share Price index 1.19 percent higher.

Dissanayake has pledged to reduce income taxes that were doubled by his predecessor Ranil Wickremesinghe, and also slash sales taxes on food and medicines.

"We think we can get those reductions into the programme and continue with the four-year bailout programme," Ratnayake said.

Dissanayake's rivals had raised fears that his Marxist party would scrap the IMF programme and push the country back into an economic crisis similar to the chaos of 2022.

A foreign exchange crisis led to shortages of essentials sparking street protests which eventually forced then leader Gotabaya Rajapaksa to flee the country and resign.

Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION audience.

The International Monetary Fund is ready to discuss its controversial $2.9 billion bailout programme for Sri Lanka with the country's new government, a spokesman said.

The International Monetary Fund is ready to discuss its controversial $2.9 billion bailout programme for Sri Lanka with the country's new government, a spokesman said. Anura Kumara Dissanayake, sworn in Monday as the country's first leftist president, has said he wants to renegotiate the deal, which has brought unpopular austerity measures. "We look forward to working together with President Dissanayake... towards building on the hard-won gains that have helped put Sri Lanka on a path to economic recovery," an IMF spokesperson in Washington said Monday. The lender of last resort noted that the South Asian nation, which defaulted on its debt in April 2022, had stabilised since the bailout. "We will discuss the timing of the third review of the IMF-supported programme with the new administration as soon as practicable," the spokesperson said referring to the periodic review of the bailout. A senior aide of the new president told AFP a day after the election that his People's Liberation Front party will "not tear up" the IMF deal. "Our plan is to engage with the IMF and introduce certain amendments," Bimal Ratnayake said. "We will not tear up the IMF programme. It is a binding document, but there is a provision to renegotiate." Sri Lanka's tiny stock market fell sharply within the first few minutes of trading on Monday, when Dissanayake took office, but recovered quickly and ended the day with the main All Share Price index 1.19 percent higher. Dissanayake has pledged to reduce income taxes that were doubled by his predecessor Ranil Wickremesinghe, and also slash sales taxes on food and medicines. "We think we can get those reductions into the programme and continue with the four-year bailout programme," Ratnayake said. Dissanayake's rivals had raised fears that his Marxist party would scrap the IMF programme and push the country back into an economic crisis similar to the chaos of 2022. A foreign exchange crisis led to shortages of essentials sparking street protests which eventually forced then leader Gotabaya Rajapaksa to flee the country and resign. Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION audience.

Ready to talk about bailout programme with Sri Lanka's new leftist government, says IMF

Media reports show the first scheduled discussions between the international monetary fund (IMF) and Russia since the beginning of Moscow's invasion of Ukraine have been postponed indefinitely. This is due to opposition from governments within the European union.

IMF halts Russia review after EU nations criticise plan

As China’s trade surplus expands and the U.S. Faces a widening trade deficit, the IMF is asking a question: what’s driving these imbalances? Is this a new chapter in the global economic rivalry? Or are deeper macroeconomic forces at play? Take a look at this next report for more…

IMF flags global trade gaps post-pandemic

The Marxist Janatha Vimukthi Peramuna (JVP) has pledged to cancel the Adani Group's wind power project in Sri Lanka if they win the upcoming presidential election. This statement was made on Monday as part of their campaign leading up to the election scheduled for this weekend.

Sri Lanka's JVP Party vows to cancel Adani deal

The Maldives says its financial troubles are "temporary" and the luxury tourist destination has no plans to seek an International Monetary Fund bailout after warnings of a possible sovereign default.

Foreign Minister Moosa Zameer said the Indian Ocean archipelago, best known for its upscale resorts and celebrity visitors, was pressing ahead with tax hikes to meet its debt servicing obligations.

"We have bilateral partners who are very sensitive to our needs and our situation," Zameer told reporters in Colombo on Friday night.

"I seriously don't think it is a time where we will be right now engaging with the IMF... The issue that we have is very temporary because currently we are having a dip in reserves."

He said tax reforms, along with the rationalisation of state-owned enterprises, would improve liquidity.&nbsp;

Zameer was visiting Sri Lanka along with Finance Minister Mohamed Shafeeq to meet with local central bankers and other officials.

China and India are the two largest bilateral lenders to the Maldives, a tiny nation of 1,192 tiny coral islands in the Indian Ocean scattered across the equator.

President Mohamed Muizzu came to power a year ago on the back of a campaign to evict a small contingent of Indian troops deployed in the Maldives and pursue closer ties with China.

<h2>- 'Rough patches' -</h2>

After the removal of the troops, the two nations have mended fences and had "cleared misunderstandings," Zameer said.

"At the start of our government, we did have some rough patches, you know," he added.

Also read:&nbsp;<a href="https://www.wionews.com/india-news/indian-security-forces-gun-down-two-terrorists-in-j-ks-baramulla-758576">Indian security forces gun down three terrorists in J-K's Baramulla</a>

"We have fantastic bilateral relations with both China and India... Both countries continue to support us."

China has pledged more funding since last year's victory by Muizzu, who thanked the country for its "selfless assistance" for development funds on a state visit to Beijing shortly after taking power.&nbsp;

Official data showed the Maldives' foreign debt at $3.37 billion in the first quarter of this year, equating to around 45 per cent of gross domestic product.

China accounted for about 20 per cent of the external debt while India owned just under 18 percent.

Zameer's visit came days after Moody's Ratings downgraded the Maldives' credit rating by one notch to Caa2, considered a high credit risk.&nbsp;

Fellow ratings agency Fitch downgraded the Maldives in June, saying that dwindling foreign currency reserves posed a financial risk.

It said the government's debt servicing obligations, amounting to $409 million this year, would add to severe stress.

Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION&nbsp;audience.

The Maldives says its financial troubles are "temporary" and the luxury tourist destination has no plans to seek an International Monetary Fund bailout after warnings of a possible sovereign default.

The Maldives says its financial troubles are "temporary" and the luxury tourist destination has no plans to seek an International Monetary Fund bailout after warnings of a possible sovereign default. Foreign Minister Moosa Zameer said the Indian Ocean archipelago, best known for its upscale resorts and celebrity visitors, was pressing ahead with tax hikes to meet its debt servicing obligations. "We have bilateral partners who are very sensitive to our needs and our situation," Zameer told reporters in Colombo on Friday night. "I seriously don't think it is a time where we will be right now engaging with the IMF... The issue that we have is very temporary because currently we are having a dip in reserves." He said tax reforms, along with the rationalisation of state-owned enterprises, would improve liquidity. Zameer was visiting Sri Lanka along with Finance Minister Mohamed Shafeeq to meet with local central bankers and other officials. China and India are the two largest bilateral lenders to the Maldives, a tiny nation of 1,192 tiny coral islands in the Indian Ocean scattered across the equator. President Mohamed Muizzu came to power a year ago on the back of a campaign to evict a small contingent of Indian troops deployed in the Maldives and pursue closer ties with China. - 'Rough patches' - After the removal of the troops, the two nations have mended fences and had "cleared misunderstandings," Zameer said. "At the start of our government, we did have some rough patches, you know," he added. Also read: Indian security forces gun down three terrorists in J-K's Baramulla "We have fantastic bilateral relations with both China and India... Both countries continue to support us." China has pledged more funding since last year's victory by Muizzu, who thanked the country for its "selfless assistance" for development funds on a state visit to Beijing shortly after taking power. Official data showed the Maldives' foreign debt at $3.37 billion in the first quarter of this year, equating to around 45 per cent of gross domestic product. China accounted for about 20 per cent of the external debt while India owned just under 18 percent. Zameer's visit came days after Moody's Ratings downgraded the Maldives' credit rating by one notch to Caa2, considered a high credit risk. Fellow ratings agency Fitch downgraded the Maldives in June, saying that dwindling foreign currency reserves posed a financial risk. It said the government's debt servicing obligations, amounting to $409 million this year, would add to severe stress. Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION audience.

Maldives rules out IMF bailout despite financial woes, plans tax hikes to manage debt

In a bid to bolster its struggling economy, Bangladesh has urgently requested $5 billion in financial assistance from leading international lenders, including the International Monetary Fund (IMF), World Bank, and Japan International Cooperation Agency (JICA), according to Muhammad Yunus, the head of the interim government as detailed in a report by Reuters.

The $5 billion request comprises $3 billion from the IMF, $1 billion from the World Bank, and an additional $1 billion from JICA. The government is also negotiating for lower interest rates and extended loan tenures from Russia and China to help navigate the economic fallout of rising global prices due to the Russia-Ukraine conflict.

"We are also negotiating for lower interest rates and extended loan tenures from Russia and China," Yunus said in a televised address to the South Asian nation, as the government grapples with mounting foreign payments.

Bangladesh's $450-billion economy has been under immense pressure since the war sharply increased the cost of fuel and food imports, forcing it to seek financial support from the IMF last year in the form of a $4.7-billion bailout.

Goal of the Interim Government<o:p></o:p>

The interim administration's primary goal is to guide the nation through a peaceful transition, culminating in new elections. However, the economic turmoil, worsened by global pressures, has put additional strain on the nation's financial stability.

Yunus also announced plans to establish six new commissions aimed at reforming critical sectors, including the constitution, the electoral system, the judiciary, the police, the Anti-Corruption Commission, and public administration. These commissions will investigate specific areas and offer recommendations for reforms. "We plan to expand this approach by forming additional commissions to tackle other important matters," Yunus said.

The six commissions are expected to be fully operational by October 1 and to complete their work within three months. In the final phase, a detailed outline of the proposed reforms will be developed after a consultation period of three to seven days, ensuring that a wide range of perspectives are incorporated into the reform process.

Hence, as Bangladesh navigates these challenging times, the government's efforts to secure emergency funds and implement comprehensive reforms will go a long way in stabilising the economy and paving the way for a brighter future for the citizens of Bangladesh.

In a bid to bolster its struggling economy, Bangladesh has urgently requested $5 billion in financial assistance from leading international lenders, including the International Monetary Fund (IMF), World Bank, and Japan International Cooperation Agency (JICA), according to Muhammad Yunus, the head of the interim government as detailed in a report by Reuters.

In a bid to bolster its struggling economy, Bangladesh has urgently requested $5 billion in financial assistance from leading international lenders, including the International Monetary Fund (IMF), World Bank, and Japan International Cooperation Agency (JICA), according to Muhammad Yunus, the head of the interim government as detailed in a report by Reuters. The $5 billion request comprises $3 billion from the IMF, $1 billion from the World Bank, and an additional $1 billion from JICA. The government is also negotiating for lower interest rates and extended loan tenures from Russia and China to help navigate the economic fallout of rising global prices due to the Russia-Ukraine conflict. "We are also negotiating for lower interest rates and extended loan tenures from Russia and China," Yunus said in a televised address to the South Asian nation, as the government grapples with mounting foreign payments. Bangladesh's $450-billion economy has been under immense pressure since the war sharply increased the cost of fuel and food imports, forcing it to seek financial support from the IMF last year in the form of a $4.7-billion bailout. Goal of the Interim Government The interim administration's primary goal is to guide the nation through a peaceful transition, culminating in new elections. However, the economic turmoil, worsened by global pressures, has put additional strain on the nation's financial stability. Yunus also announced plans to establish six new commissions aimed at reforming critical sectors, including the constitution, the electoral system, the judiciary, the police, the Anti-Corruption Commission, and public administration. These commissions will investigate specific areas and offer recommendations for reforms. "We plan to expand this approach by forming additional commissions to tackle other important matters," Yunus said. The six commissions are expected to be fully operational by October 1 and to complete their work within three months. In the final phase, a detailed outline of the proposed reforms will be developed after a consultation period of three to seven days, ensuring that a wide range of perspectives are incorporated into the reform process. Hence, as Bangladesh navigates these challenging times, the government's efforts to secure emergency funds and implement comprehensive reforms will go a long way in stabilising the economy and paving the way for a brighter future for the citizens of Bangladesh.

Bangladesh seeks $5 billion in emergency funds to boost dwindling forex reserves

Two years after an economic meltdown nearly doubled poverty rates in Sri Lanka, the nation is gearing up for a crucial presidential election on September 21st. With austerity measures still fresh in people's minds, this vote could redefine the country's economic future.

Sri Lanka Elections: What does it mean for the IMF bailout? | World Business Watch

The impending interest rate cuts to be made by the Fed are "in line" with International Monetary Fund advice that has put a premium on making sure inflation was controlled but now sees risks shifting toward the labour market, IMF economic counsellor Pierre-Olivier Gourinchas said on Friday.

"What was telegraphed by (Fed chair Jerome) Powell today is very much in line with what we've advocated," Gourinchas said on the sidelines of a Kansas City Fed economic conference. "Inflation has been improving, and labour markets have shown signs of cooling... If labour markets are not contributing to inflation pressures anymore... then you might ease a little bit on cooling aggregate demand and bring (the policy rate of interest) back closer to neutral."

The Fed has kept the benchmark interest rate in the range of 5.25 per cent to 5.5 per cent for more than a year now—a level that it feels is causing too much restraint on economic activity.

In prepared remarks to the conference on Friday, Powell said simply that with inflation only a half-point above the Fed's 2 per cent target and the unemployment rate moving up, "the time has come for policy to adjust," remarks that crystallised the expectations for the first rate cut at the Fed's Sept. 17-18 meeting. Indeed, some economists are even expecting that the initial cut might be a larger-than-usual half-point reduction, depending on how an upcoming August jobs report turns out.

Speaking in an interview, Gourinchas said the US shouldn't be "complacent" that inflation has disappeared, pointing out that service-sector prices remain on a rising trajectory and that the Fed will need to calibrate both the pace and extent of rate cuts with the incoming economic data.

"There is still some upside risk to inflation," he said.

Yet it was also clear the US job market was cooling, Gourinchas said, though from a position of strength and ongoing economic growth.

"I don't think we are in a situation where recession is imminent" in the U.S., Gourinchas said, while the odds of a soft landing "have increased, and that remains our baseline."

The impending interest rate cuts to be made by the Fed are "in line" with International Monetary Fund advice that has put a premium on making sure inflation was controlled but now sees risks shifting toward the labour market, IMF economic counsellor Pierre-Olivier Gourinchas said on Friday.

The impending interest rate cuts to be made by the Fed are "in line" with International Monetary Fund advice that has put a premium on making sure inflation was controlled but now sees risks shifting toward the labour market, IMF economic counsellor Pierre-Olivier Gourinchas said on Friday. "What was telegraphed by (Fed chair Jerome) Powell today is very much in line with what we've advocated," Gourinchas said on the sidelines of a Kansas City Fed economic conference. "Inflation has been improving, and labour markets have shown signs of cooling... If labour markets are not contributing to inflation pressures anymore... then you might ease a little bit on cooling aggregate demand and bring (the policy rate of interest) back closer to neutral." The Fed has kept the benchmark interest rate in the range of 5.25 per cent to 5.5 per cent for more than a year now—a level that it feels is causing too much restraint on economic activity. In prepared remarks to the conference on Friday, Powell said simply that with inflation only a half-point above the Fed's 2 per cent target and the unemployment rate moving up, "the time has come for policy to adjust," remarks that crystallised the expectations for the first rate cut at the Fed's Sept. 17-18 meeting. Indeed, some economists are even expecting that the initial cut might be a larger-than-usual half-point reduction, depending on how an upcoming August jobs report turns out. Speaking in an interview, Gourinchas said the US shouldn't be "complacent" that inflation has disappeared, pointing out that service-sector prices remain on a rising trajectory and that the Fed will need to calibrate both the pace and extent of rate cuts with the incoming economic data. "There is still some upside risk to inflation," he said. Yet it was also clear the US job market was cooling, Gourinchas said, though from a position of strength and ongoing economic growth. "I don't think we are in a situation where recession is imminent" in the U.S., Gourinchas said, while the odds of a soft landing "have increased, and that remains our baseline."

IMF's Gourinchas supports US rate cuts but warns inflation risks remain

The new head of Bangladesh's Central Bank said the country is requesting an extra $3 billion in emergency aid from the International Monetary Fund (IMF). This is to recover from the recent political unrest.

Bangladesh seeks $3 Billion IMF emergency aid | World Business Watch | WION

Artificial intelligence and cryptocurrencies are rapidly reshaping our world, but their environmental impact is raising serious concerns. New IMF data shows these industries are massive energy consumers, contributing significantly to global carbon emissions. Take a look at this next report for more

IMF: AI & crypto threaten climate goals

Can 'made in India' replace 'made in China'? Here's what Krishnamurthy Subramanian, Executive Director at IMF and India's former Chief Economic Adviser told WION's Molly Gambhir in an exclusive interaction.

Can 'made in India' replace 'made in China'? IMF Executive Director comments

Three of India's neighbouring countries- Bangladesh, Sri Lanka, and Pakistan- have witnessed unusual shifts in their political environment including calls for politicians to step down and mass protests against ruling governments which often took a violent turn, killing and injuring numerous people.

Three of India's neighbouring countries- Bangladesh, Sri Lanka, and Pakistan- have witnessed unusual shifts in their political environment including calls for politicians to step down and mass protests against ruling governments which often took a violent turn, killing and injuring numerous people. Several demonstrators also faced arrest and detention. Here's a look at what has happened in these three South Asian countries so far: Bangladesh: Anti-govt protests, Hasina's resignation, formation of new interim govt > A political crisis broke out in Bangladesh as students launched protests against the civil service job quotas last month. Students protested against public sector job quotas, which included a 30 per cent reservation for family members of freedom fighters from the 1971 War of Independence from Pakistan. > The protests, which ousted Sheikh Hasina from the prime minister's post, were also fuelled by harsh economic conditions and political repression. The COVID-19 pandemic damaged the $450 billion economy after years of strong growth, leading to high inflation, unemployment, and shrinking reserves. > Sheikh Hasina resigned as Bangladesh's PM on Monday (August 5) and fled the country. The nationwide violence killed about 300 people and injured thousands. Several protesters were also detained. > Hasina is currently in India, staying in a safe house in New Delhi. As per media reports, she plans to seek asylum in Britain, but the British Home Office has declined to comment. > Following Hasina's resignation, a caretaker government led by Nobel Peace laureate Muhammad Yunus was sworn in on Thursday, which will be tasked with holding elections. Sri Lanka: Deep financial crisis causes widespread agitation > A deep financial crisis in Sri Lanka left the country struggling to pay for imports of food, medicine and fuel and brought thousands of protesters onto the streets in March 2022. Protests escalated with sit-in demonstrations outside then-president Gotabaya Rajapaksa's office aimed at removing the president to pave the way for political reforms. > Widespread clashes broke out between pro- and anti-government protesters. The countrywide violence left nine dead and hundreds injured. Eventually Gotabaya Rajapaksa resigned from his post. > This was Sri Lanka's worst economic crisis in 75 years. > In July 2022, Ranil Wickremesinghe became the country's president, and the new government reached a preliminary agreement with the International Monetary Fund (IMF) for a loan of about $2.9 billion. > On November 14, Sri Lanka's budget laid down several measures, including reducing the government's deficit in its efforts to secure the IMF bailout. In January 2023, India told the IMF that it would support Sri Lanka's debt restructuring plan. > Also in January last year, the Export-Import Bank of China offered Sri Lanka a two-year moratorium on its debt and said it would support the country's efforts to secure the IMF loan. > Sri Lanka would be holding its first presidential election since the unrest, on September 21 this year. Pakistan: Imran Khan's ouster, his imprisonment, elections > In April 2022, cricketer-turned-politician Imran Khan was ousted as Pakistan's prime minister. He became the PM in 2018. > Khan, the chairperson of the Pakistan Tehreek-e-Insaf (PTI), was removed from the top post through a no-confidence vote in the National Assembly. He blamed the military for his ouster. No Pakistani prime minister has completed a full five-year term in office, and most have served time in jail. > Pakistan Muslim League (N) leader Shehbaz Sharif was sworn in as the new PM > Imran Khan was convicted in four cases ahead of the February national election this year and has been in jail since August last year, but all of the sentences against him have since been overturned or suspended. He was jailed on dozens of charges ranging from corruption to leaking state secrets. > The Pakistan military said that Khan and his party were behind attacks on military installations last year during widespread protests against his detention. > In this election, candidates backed by Khan gained the most seats but the PML-N and the Pakistan Peoples Party (PPP) agreed to form a coalition government, which enabled Shehbaz Sharif to be elected as prime minister for a second term. > Imran Khan's imprisonment has added to political volatility in Pakistan, which has experienced a prolonged economic crisis and last month received a bailout from the IMF. > Recently, analysts told the news agency Reuters that the instability since Khan's ouster has driven Islamabad to accept the IMF's painful fiscal consolidation requirements. (With inputs from agencies)

Crisis in Bangladesh, Sri Lanka, Pakistan: What's going on with India's neighbours?

The International Monetary Fund announced on Tuesday that it has reached "preliminary understandings" with El Salvador to make economic growth and fiscal stability more forceful. This step will set up a Fund-supported program to strengthen public finances, beef up bank reserve buffers, enhance governance and transparency, and address the risks associated with bitcoin.

It also highlighted the progress of the negotiations, referring to a set of policies that will strengthen El Salvador's primary balance by about 3.5 per cent of GDP within three years. According to them, fiscal consolidation will be achieved through measures like the rationalisation of the public wage bill. This has therefore oriented it toward being fiscally sustainable.

While the IMF has repeatedly expressed reservations about El Salvador’s use of Bitcoin as legal tender, discussions acknowledge that there are grounds for improved transparency and measures to mitigate potential fiscal and financial stability risks. “While many of the risks have not yet materialised, there is joint recognition that further efforts are needed to enhance transparency and mitigate potential fiscal and financial stability risks from the Bitcoin project,” the Fund said.

Work on the program for strengthening reserve buffers in the financial system was furthered. This plan should make it possible to maintain more resilience against economic shocks and support the overall stability of the financial sector. Moreover, the parties have agreed on measures aimed at strengthening governance and transparency, which are meaningful to retain investor confidence and foster sustainable development.

This IMF preliminary agreement with El Salvador reflects cooperation in finding solutions to the economic issues of the country. El Salvador will work on fiscal policies with a robust and sound financial system, resisting governance practices in pursuit of sustainable economic growth and stability in a financial world filled with looming risks.

The International Monetary Fund announced on Tuesday that it has reached "preliminary understandings" with El Salvador to make economic growth and fiscal stability more forceful.

The International Monetary Fund announced on Tuesday that it has reached "preliminary understandings" with El Salvador to make economic growth and fiscal stability more forceful. This step will set up a Fund-supported program to strengthen public finances, beef up bank reserve buffers, enhance governance and transparency, and address the risks associated with bitcoin. It also highlighted the progress of the negotiations, referring to a set of policies that will strengthen El Salvador's primary balance by about 3.5 per cent of GDP within three years. According to them, fiscal consolidation will be achieved through measures like the rationalisation of the public wage bill. This has therefore oriented it toward being fiscally sustainable. While the IMF has repeatedly expressed reservations about El Salvador’s use of Bitcoin as legal tender, discussions acknowledge that there are grounds for improved transparency and measures to mitigate potential fiscal and financial stability risks. “While many of the risks have not yet materialised, there is joint recognition that further efforts are needed to enhance transparency and mitigate potential fiscal and financial stability risks from the Bitcoin project,” the Fund said. Work on the program for strengthening reserve buffers in the financial system was furthered. This plan should make it possible to maintain more resilience against economic shocks and support the overall stability of the financial sector. Moreover, the parties have agreed on measures aimed at strengthening governance and transparency, which are meaningful to retain investor confidence and foster sustainable development. This IMF preliminary agreement with El Salvador reflects cooperation in finding solutions to the economic issues of the country. El Salvador will work on fiscal policies with a robust and sound financial system, resisting governance practices in pursuit of sustainable economic growth and stability in a financial world filled with looming risks.

IMF, El Salvador agree on preliminary accord to strengthen economic stability, fiscal health

Krishnamurthy Subramanian, Executive Director at IMF and India's former Chief Economic Adviser tells WION's Molly Gambhir that India can become the 'Sachin Tendulkar' of the global economy as they discuss India's growth story, India's potential as a manufacturing hub and the key takeaways from Budget 2024. Can 'made in India' replace 'made in China'? How will a reduction in corporate tax help? Will the budget do a good job of job creation? Watch to find out more

Executive Director at IMF and India's former Chief Economic Adviser speaks to WION's Molly Gambhir

Pakistan formally requested China to restructure its debt. This comes as outstanding dues for power projects increased by 44% to $410billion. Pakistan's Finance Minister had arrived in Beijing on Thrusday to engage in crucial talks on debt relief and structural reforms proposed by International Monetary Fund.

Pakistan Finance Minister Muhammad Aurangzeb in China as Pak seeks debt relief from China

The International Monetary Fund on Tuesday raised India's growth forecast for 2024-25 to 7% from 6.8% on the back of improving private consumption, particularly in rural India.

The&nbsp;IMF&nbsp;left unchanged its estimate for a 6.5% growth in Asia's third largest economy's gross domestic product in the 2025-26 financial year, it said in the World Economic Outlook.

The&nbsp;IMF&nbsp;had raised its forecast for India's GDP growth to 6.8% from 6.5% in April.

The International Monetary Fund on Tuesday raised India's growth forecast for 2024-25 to 7% from 6.8% on the back of improving private consumption, particularly in rural India.

The International Monetary Fund on Tuesday raised India's growth forecast for 2024-25 to 7% from 6.8% on the back of improving private consumption, particularly in rural India. The IMF left unchanged its estimate for a 6.5% growth in Asia's third largest economy's gross domestic product in the 2025-26 financial year, it said in the World Economic Outlook. The IMF had raised its forecast for India's GDP growth to 6.8% from 6.5% in April.

IMF raises India's GDP forecast to 7% for 2024-25

Pakistan has entered&nbsp;a deal for a fresh $7-billion loan with the International Monetary Fund (IMF), the global lender announced on Saturday (July 13). In exchange for the 37-month loan, the Pakistani government under Prime Minister Shehbaz Sharif pledged to implement more economic reforms that are expected to be unpopular among the Pakistani people.

The loan is&nbsp;the 24th of its kind from&nbsp;the IMF since&nbsp;Pakistan came into being more than six decades after bitter partition from British India. But it&nbsp;is "subject to approval by the IMF’s Executive Board", the IMF said in a statement.

<h2>What does it mean?</h2>

The deal's main aim is to support the Pakistani government's steps to establish overall&nbsp; macroeconomic stability while creating&nbsp; necessary conditions for growth.

Also watch |&nbsp;IMF warns of challenges ahead for Pak economy

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"This includes steps to strengthen fiscal and monetary policy and reforms to broaden the tax base, improve State Owned Enterprises’ (SOE) management, strengthen competition, secure a level playing field for investment, enhance human capital, and scale up social protection through increased generosity," the statement said.

Also read |&nbsp;<a href="https://www.wionews.com/world/imf-approves-immediate-disbursal-of-11-billion-loan-tranche-to-pakistan-716555">IMF approves immediate disbursal of $1.1 billion loan tranche to Pakistan</a>

The deal came after months of negotiations. It is conditional on the basis that&nbsp;Pakistan improve its tax collection system. Only 5.2 million people filed income tax returns in 2022 in a country with some 236 million people.

Around 40 per cent of the Pakistani population already lives below the poverty line. But the World Bank said in April it feared that 10 million additional Pakistanis would fall below this threshold.

Last year, Pakistan&nbsp;was nearing default as its economy was hard hit by political chaos following former prime minister Imran Khan's imprisonment, the aftermath of huge monsoon floods in 2022, and decades of mismanagement.

Under the programmw, “we need to ensure structural reforms and bring self-sustainability in areas of public finance, energy, and state-owned institutions,” Pakistan’s Finance Minister Muhammad Aurangzeb was quoted by Geo News as saying on July 13.

Pakistan has entered a deal for a fresh $7-billion loan with the International Monetary Fund (IMF), the global lender announced on Saturday (July 13). In exchange for the 37-month loan, the Pakistani government under Prime Minister Shehbaz Sharif pledged to implement more economic reforms that are expected to be unpopular among the Pakistani people.

Pakistan has entered a deal for a fresh $7-billion loan with the International Monetary Fund (IMF), the global lender announced on Saturday (July 13). In exchange for the 37-month loan, the Pakistani government under Prime Minister Shehbaz Sharif pledged to implement more economic reforms that are expected to be unpopular among the Pakistani people. The loan is the 24th of its kind from the IMF since Pakistan came into being more than six decades after bitter partition from British India. But it is "subject to approval by the IMF’s Executive Board", the IMF said in a statement. What does it mean? The deal's main aim is to support the Pakistani government's steps to establish overall macroeconomic stability while creating necessary conditions for growth. Also watch | IMF warns of challenges ahead for Pak economy × "This includes steps to strengthen fiscal and monetary policy and reforms to broaden the tax base, improve State Owned Enterprises’ (SOE) management, strengthen competition, secure a level playing field for investment, enhance human capital, and scale up social protection through increased generosity," the statement said. Also read | IMF approves immediate disbursal of $1.1 billion loan tranche to Pakistan The deal came after months of negotiations. It is conditional on the basis that Pakistan improve its tax collection system. Only 5.2 million people filed income tax returns in 2022 in a country with some 236 million people. Around 40 per cent of the Pakistani population already lives below the poverty line. But the World Bank said in April it feared that 10 million additional Pakistanis would fall below this threshold. Last year, Pakistan was nearing default as its economy was hard hit by political chaos following former prime minister Imran Khan's imprisonment, the aftermath of huge monsoon floods in 2022, and decades of mismanagement. Under the programmw, “we need to ensure structural reforms and bring self-sustainability in areas of public finance, energy, and state-owned institutions,” Pakistan’s Finance Minister Muhammad Aurangzeb was quoted by Geo News as saying on July 13.

Pakistan gets 24th IMF loan since 1947; this time it’s $7 billion

The IMF has warned that the UK, under its new Labour government, faces tough decisions due to high public debt. In its annual economic review, the IMF emphasized the need to balance public spending while stabilizing debt, which is nearing 100% of GDP. This challenge arises as the country requires significant investment in sectors like healthcare, which suffers from chronic underfunding and an aging population. Additionally, the IMF called for ambitious reforms to boost growth.

UK faces tough fiscal choices: IMF

The International Monetary Fund (IMF) has warned that the United Kingdom, under its new Labour government, faces tough decisions due to high public debt.

In its annual economic review, the IMF stressed the need to balance public spending while stabilising debt, which is nearing 100 per cent of GDP.

This challenge arises as the country requires significant investment in sectors like healthcare, which suffers from chronic underfunding and an ageing population.

Additionally, the IMF called for ambitious reforms to boost growth.

For consumers, this means potential changes in tax policies.

The IMF suggested that the government might need to increase tax revenues by raising carbon, inheritance, and property taxes, and broadening the VAT base.

While these measures aim to control debt, they could impact household budgets and consumer spending.

The IMF also noted a soft landing for the economy after a mild recession last year, predicting 0.7 per cent growth in 2024, with a rise to 1.5 per cent in 2025 and 1.7 per cent in 2026.

Inflation is expected to hit 2.5 per cent temporarily by year-end but is currently on target.

Despite challenges like weak productivity and an ageing population, increased immigration has helped mitigate negative effects, with Brexit impacts gradually fading.

The Labour Party, led by Keir Starmer, won a landslide victory, ending 14 years of conservative rule.

New finance minister Rachel Reeves aims to stimulate growth, focusing on infrastructure projects, including onshore wind power and housing.

Consumers can expect a period of adjustment with potential tax hikes and a focus on long-term economic stability and growth, which could improve public services and infrastructure in the future.

The International Monetary Fund (IMF) has warned that the United Kingdom, under its new Labour government, faces tough decisions due to high public debt. In its annual economic review, the IMF stressed the need to balance public spending while stabilising debt, which is nearing 100 per cent of GDP.

The International Monetary Fund (IMF) has warned that the United Kingdom, under its new Labour government, faces tough decisions due to high public debt. In its annual economic review, the IMF stressed the need to balance public spending while stabilising debt, which is nearing 100 per cent of GDP. This challenge arises as the country requires significant investment in sectors like healthcare, which suffers from chronic underfunding and an ageing population. Additionally, the IMF called for ambitious reforms to boost growth. For consumers, this means potential changes in tax policies. The IMF suggested that the government might need to increase tax revenues by raising carbon, inheritance, and property taxes, and broadening the VAT base. While these measures aim to control debt, they could impact household budgets and consumer spending. The IMF also noted a soft landing for the economy after a mild recession last year, predicting 0.7 per cent growth in 2024, with a rise to 1.5 per cent in 2025 and 1.7 per cent in 2026. Inflation is expected to hit 2.5 per cent temporarily by year-end but is currently on target. Despite challenges like weak productivity and an ageing population, increased immigration has helped mitigate negative effects, with Brexit impacts gradually fading. The Labour Party, led by Keir Starmer, won a landslide victory, ending 14 years of conservative rule. New finance minister Rachel Reeves aims to stimulate growth, focusing on infrastructure projects, including onshore wind power and housing. Consumers can expect a period of adjustment with potential tax hikes and a focus on long-term economic stability and growth, which could improve public services and infrastructure in the future.

UK faces fiscal tightrope: IMF urges reforms amid high debt

As the election season intensifies, the international monetary fund has issued a stark warning to the United States about its rising debt and fiscal deficits. In its annual report, the IMF highlighted that the US' debt-to-gdp ratio could reach 140% by 2030 if current trends continue.

IMF warns US debt-to-gdp ratio could reach 140% by 2030

Pakistan is aiming to finalize a staff-level agreement with the International Monetary Fund (IMF) for a bailout exceeding $6 billion this month. Junior Finance Minister Ali Pervaiz Malik stated that all IMF requirements in the annual budget have been addressed, despite domestic concerns over new taxation measures.

Pakistan blocks 210,000 SIM cards over tax filings

The price Japanese companies charge each other for services increased 2.5 per cent in May compared to last year, indicating that businesses are passing on rising labour costs to their clients. This is according to Reuters.

This rise, however, is slower than the 2.7 per cent gain observed in April. 
The Bank of Japan (BOJ) data also showed that an index measuring service prices with high labour content remained unchanged at 2.5 per cent year-on-year.

According to a report by Associate Press, even though this growth in business service prices, Japan's economy contracted at an annualised rate of 1.8 per cent in the first quarter of 2023. This is a slight improvement from the initial estimate of a 2.0 per cent decline. The revision can be attributed to an upward adjustment in private sector investments, which went from -0.5 per cent to -0.4 per cent, according to data provided by the Cabinet Office.

Japan's GDP, a measure of the nation's economic output, remained negative due to a decrease in exports and consumption compared to the previous quarter. The economy also witnessed a 0.5 per cent decline on a quarter-to-quarter basis in the January-March period.

Slow wage growth and rising import prices due to the weakening yen against the US dollar have been hurdles for the Japanese economy. The dollar has recently been trading at nearly 157 yen, compared to 140 yen a year ago.

While the weak yen has boosted tourism, it has also made imports more expensive, impacting a nation that relies heavily on energy imports. Stagnant consumer spending, which makes up half of Japan's economic activity, has further burdened the economy.

Another factor weighing on the economy is the ongoing scandal involving deceptive vehicle testing by major automakers, including Toyota, which has damaged Japan's reputation for quality. The scandal has led to production halts on some models.

Government officials have raided the headquarters of several automakers, including Honda and Mazda, investigating their testing practices. Toyota's chairman recently apologised for the widespread fraudulent testing, which involved the use of incorrect data and improper testing procedures. While the safety of the vehicles was not compromised, the companies aimed to expedite the testing process.

Investors are closely following the upcoming meeting of the Bank of Japan's monetary policy board. The central bank raised interest rates earlier this year for the first time since 2007, but only marginally, to a range of 0 per cent to 0.1 per cent. S&amp;P Global Market Intelligence highlighted concerns about the weak yen and rising input costs faced by Japanese manufacturers.

Japan's unemployment rate remains low at around 2.6 per cent, one of the lowest among major economies. However, the country faces a serious labour shortage due to its declining birth rate, which hit a record low last year, along with a decrease in marriages.

Analysts warn that these demographic trends could pose a long-term threat, potentially weakening Japan's global influence and even impacting its security in the future, given the country's already low per capita output.

The International Monetary Fund (IMF) predicts that Japan's GDP will fall to the fifth-largest globally by next year, surpassed by India.

(With inputs from Reuters and Associate Press)

The price Japanese companies charge each other for services increased 2.5 per cent in May compared to last year, indicating that businesses are passing on rising labour costs to their clients.

The price Japanese companies charge each other for services increased 2.5 per cent in May compared to last year, indicating that businesses are passing on rising labour costs to their clients. This is according to Reuters. This rise, however, is slower than the 2.7 per cent gain observed in April. The Bank of Japan (BOJ) data also showed that an index measuring service prices with high labour content remained unchanged at 2.5 per cent year-on-year. According to a report by Associate Press, even though this growth in business service prices, Japan's economy contracted at an annualised rate of 1.8 per cent in the first quarter of 2023. This is a slight improvement from the initial estimate of a 2.0 per cent decline. The revision can be attributed to an upward adjustment in private sector investments, which went from -0.5 per cent to -0.4 per cent, according to data provided by the Cabinet Office. Japan's GDP, a measure of the nation's economic output, remained negative due to a decrease in exports and consumption compared to the previous quarter. The economy also witnessed a 0.5 per cent decline on a quarter-to-quarter basis in the January-March period. Slow wage growth and rising import prices due to the weakening yen against the US dollar have been hurdles for the Japanese economy. The dollar has recently been trading at nearly 157 yen, compared to 140 yen a year ago. While the weak yen has boosted tourism, it has also made imports more expensive, impacting a nation that relies heavily on energy imports. Stagnant consumer spending, which makes up half of Japan's economic activity, has further burdened the economy. Another factor weighing on the economy is the ongoing scandal involving deceptive vehicle testing by major automakers, including Toyota, which has damaged Japan's reputation for quality. The scandal has led to production halts on some models. Government officials have raided the headquarters of several automakers, including Honda and Mazda, investigating their testing practices. Toyota's chairman recently apologised for the widespread fraudulent testing, which involved the use of incorrect data and improper testing procedures. While the safety of the vehicles was not compromised, the companies aimed to expedite the testing process. Investors are closely following the upcoming meeting of the Bank of Japan's monetary policy board. The central bank raised interest rates earlier this year for the first time since 2007, but only marginally, to a range of 0 per cent to 0.1 per cent. S&P Global Market Intelligence highlighted concerns about the weak yen and rising input costs faced by Japanese manufacturers. Japan's unemployment rate remains low at around 2.6 per cent, one of the lowest among major economies. However, the country faces a serious labour shortage due to its declining birth rate, which hit a record low last year, along with a decrease in marriages. Analysts warn that these demographic trends could pose a long-term threat, potentially weakening Japan's global influence and even impacting its security in the future, given the country's already low per capita output. The International Monetary Fund (IMF) predicts that Japan's GDP will fall to the fifth-largest globally by next year, surpassed by India. (With inputs from Reuters and Associate Press)

Japan's business service prices rise as companies pass on labour costs

Sri Lanka's recent economic data paints a robust picture of the country's economic recovery after a crippling foreign exchange crisis.

The economy grew 5.3 per cent in January-March quarter, a drastic improvement on the 10.7 per cent contraction in the same quarter last year. This expansions also topped Bloomberg forecast of 4 per cent.

Deputy finance minister Ranjith Siyambalapitiya expressed optimism regarding the country's growth momentum. He said 'It is remarkable that we were able to achieve positive growth after facing the worst economic crisis ever.'

Sri Lanka's industrial sector scripted a remarkable comeback, with an expansion of 11.8 per cent in the first quarter. This is in sharp contrast to the 24.3 per cent contraction in the same quarter last year. Construction sector also rebounded strongly as inflation settles from its peak of 70 per cent in September 2022.

Sri Lanka's economic crisis began with a foreign reserves shortfall, which led to a sudden shortage of essentials like food, fuel and medicines. This fuelled&nbsp;a civil unrest, leading to a political upheavel of then president Gotabaya Rajapaksa.

His successor Ranil Wickremesinghe has initiated major tax reforms to generate state revenues. While energy subsidies were withdrawn and prices of essentials also raised, the country is slowly breaking away from the shackles of inflation. The International Monetary Fund released $336 million as part of a four-year $2.9 billion bailout for Sri Lanka after defaulting on the $46 billion foreign debt in April 2022.

Sri Lanka's recent economic data paints a robust picture of the country's economic recovery after a crippling foreign exchange crisis. The economy grew 5.3 per cent in January-March quarter, a drastic improvement on the 10.

Sri Lanka's recent economic data paints a robust picture of the country's economic recovery after a crippling foreign exchange crisis. The economy grew 5.3 per cent in January-March quarter, a drastic improvement on the 10.7 per cent contraction in the same quarter last year. This expansions also topped Bloomberg forecast of 4 per cent. Deputy finance minister Ranjith Siyambalapitiya expressed optimism regarding the country's growth momentum. He said 'It is remarkable that we were able to achieve positive growth after facing the worst economic crisis ever.' Sri Lanka's industrial sector scripted a remarkable comeback, with an expansion of 11.8 per cent in the first quarter. This is in sharp contrast to the 24.3 per cent contraction in the same quarter last year. Construction sector also rebounded strongly as inflation settles from its peak of 70 per cent in September 2022. Sri Lanka's economic crisis began with a foreign reserves shortfall, which led to a sudden shortage of essentials like food, fuel and medicines. This fuelled a civil unrest, leading to a political upheavel of then president Gotabaya Rajapaksa. His successor Ranil Wickremesinghe has initiated major tax reforms to generate state revenues. While energy subsidies were withdrawn and prices of essentials also raised, the country is slowly breaking away from the shackles of inflation. The International Monetary Fund released $336 million as part of a four-year $2.9 billion bailout for Sri Lanka after defaulting on the $46 billion foreign debt in April 2022.

Sri Lankan economy rebounds as inflation slows

<h2 class="MsoNormal">IMF releases $336 million as part of bailout program<o:p></o:p></h2>

The International Monetary Fund (IMF) has approved the second review of Sri Lanka's $2.9 billion bailout package, authorising the flow of around $336 million to the crisis-hit nation. The global lender acknowledged signs of economic growth in a statement issued on Wednesday but warned that the country's economy remained highly vulnerable and that achieving debt sustainability remains a challenge.<o:p></o:p>

<h2 class="MsoNormal">IMF urges swift debt restructuring<o:p></o:p></h2>

The IMF has urged the Official Creditor Committee (OCC), which comprises key lenders Japan and India, to complete a Memorandum of Understanding (MoU) as soon as possible. It also encouraged complete agreements with the Chinese Export-Import Bank. The lender highlighted the importance of completing these agreements in stabilising Sri Lanka's financial status and ensuring a long-term economic recovery.<o:p></o:p>

<h2 class="MsoNormal">Sri Lanka's economic crisis and recovery<o:p></o:p></h2>

Sri Lanka experienced its greatest financial crisis in over seventy years in 2022, following a significant depletion of its foreign exchange reserves. This resulted in a dollar shortage, driving inflation to reach 70 per cent, a steep 7.3 per cent economic contraction, and the rupee to collapse. The IMF bailout won in March of last year has subsequently brought some stability, with the currency rising by 7 per cent in recent months and inflation falling to 0.9 per cent in May. However, demand remains low, and continuing debt restructuring talks continue to rattle markets.<o:p></o:p>

<h2 class="MsoNormal">Key economic indicators show improvement<o:p></o:p></h2>

According to the IMF, Sri Lanka's economy is beginning to revive. Inflation has slowed, income collection is increasing, and foreign reserves are being accumulated. Shehan Semasinghe, Sri Lanka's State Minister of Finance, pointed out&nbsp;the significance of these events, saying on platform X that the approval of the second review demonstrates a continuous commitment to economic recovery and growth, which is critical for maintaining stability and resilience.<o:p></o:p>

<h2 class="MsoNormal">Challenges and future risks<o:p></o:p></h2>

Despite these encouraging signs, the IMF cautioned of "important vulnerabilities" that continue to imperil Sri Lanka's economic future. These include issues such as continued debt restructuring, income mobilisation, reserve buildup, and the financial sector's ability to support recovery. The IMF underlined the importance of additional revenue measures to finance the 2025 budget, as well as further tax administration reforms and increased clarity in tax exemption limits.<o:p></o:p>

The lender also expressed concern about potential domestic concerns, including the prospect of "waning reform momentum" if consistent policies are not maintained. With presidential elections slated for before mid-October, opposition parties have suggested that if elected, they may reconsider current government tax policy and IMF program aims.<o:p></o:p>

(With inputs from Agencies)<o:p></o:p>

IMF releases $336 million as part of bailout program The International Monetary Fund (IMF) has approved the second review of Sri Lanka's $2.9 billion bailout package, authorising the flow of around $336 million to the crisis-hit nation.

IMF releases $336 million as part of bailout program The International Monetary Fund (IMF) has approved the second review of Sri Lanka's $2.9 billion bailout package, authorising the flow of around $336 million to the crisis-hit nation. The global lender acknowledged signs of economic growth in a statement issued on Wednesday but warned that the country's economy remained highly vulnerable and that achieving debt sustainability remains a challenge. IMF urges swift debt restructuring The IMF has urged the Official Creditor Committee (OCC), which comprises key lenders Japan and India, to complete a Memorandum of Understanding (MoU) as soon as possible. It also encouraged complete agreements with the Chinese Export-Import Bank. The lender highlighted the importance of completing these agreements in stabilising Sri Lanka's financial status and ensuring a long-term economic recovery. Sri Lanka's economic crisis and recovery Sri Lanka experienced its greatest financial crisis in over seventy years in 2022, following a significant depletion of its foreign exchange reserves. This resulted in a dollar shortage, driving inflation to reach 70 per cent, a steep 7.3 per cent economic contraction, and the rupee to collapse. The IMF bailout won in March of last year has subsequently brought some stability, with the currency rising by 7 per cent in recent months and inflation falling to 0.9 per cent in May. However, demand remains low, and continuing debt restructuring talks continue to rattle markets. Key economic indicators show improvement According to the IMF, Sri Lanka's economy is beginning to revive. Inflation has slowed, income collection is increasing, and foreign reserves are being accumulated. Shehan Semasinghe, Sri Lanka's State Minister of Finance, pointed out the significance of these events, saying on platform X that the approval of the second review demonstrates a continuous commitment to economic recovery and growth, which is critical for maintaining stability and resilience. Challenges and future risks Despite these encouraging signs, the IMF cautioned of "important vulnerabilities" that continue to imperil Sri Lanka's economic future. These include issues such as continued debt restructuring, income mobilisation, reserve buildup, and the financial sector's ability to support recovery. The IMF underlined the importance of additional revenue measures to finance the 2025 budget, as well as further tax administration reforms and increased clarity in tax exemption limits. The lender also expressed concern about potential domestic concerns, including the prospect of "waning reform momentum" if consistent policies are not maintained. With presidential elections slated for before mid-October, opposition parties have suggested that if elected, they may reconsider current government tax policy and IMF program aims. (With inputs from Agencies)

IMF approves second review of Sri Lanka's $2.9 billion bailout, warns of vulnerabilities

Pakistan's coalition government is set to unveil ambitious fiscal targets in its 2024/2025 budget today. The country aims to secure a crucial bailout from the international monetary fund. Officials and analysts anticipate that the budget will be contractionary. Aiming to bridge the gap between revenue collection and total expenditure.

PM Sharif's tough reforms under pressure

Now, we look at whether the dollar is losing its global dominance. International Monetary Fund's data reveals that US dollar's dominance as the world's primary reserve currency is slowly eroding. While it remains the most widely held reserve currency, the share has been declining for the past two decades. This trend continues despite recent strength in the dollar itself.

IMF data shows gradual decline in dollar's share of global reserves

Pakistan: PM Sharif's tough reforms under pressure

IMF data shows the US Dollar is slowly losing its grip as the world’s reserve currency.&nbsp;

It’s still the most held reserve currency but has been declining for 20 years.&nbsp;

This trend continues even with the dollar strengthening recently.&nbsp;

Central banks are diversifying their reserves, going into non-traditional currencies like the Australian dollar, Canadian dollar and Chinese yuan.&nbsp;

It’s all about yield, diversification and ease of trading with new digital tech.&nbsp;

Some think geopolitical tensions will speed up the decline of the dollar’s reserve status.&nbsp;

But data shows this trend is bigger than just a few big reserve holders and includes most G20 economies.&nbsp;

China has actively promoted the internationalisation of its currency.&nbsp;

But despite that, the yuan’s share of global reserves has plateaued recently, mostly because of the recent depreciation of the currency.&nbsp;

US financial sanctions have also impacted reserve management decisions.&nbsp;

Central banks are slowly shifting away from currencies under sanctions, towards gold.&nbsp;

Gold’s share of global reserves is still low historically,&nbsp;

But some emerging market central banks are accumulating gold as a hedge against economic and geopolitical risks.&nbsp;

IMF says the decline of the dollar’s dominance is a long-term process, not a sudden drop.&nbsp;

While the dollar is still the most important reserve currency, central banks are looking to diversify their holdings.&nbsp;

This ‘de-dollarisation’ trend is driven by yield, tech and geopolitical risk.&nbsp;

Diversification is happening beyond major countries like Russia &amp; China. 46 G20 countries are currently leading this shift away from dollar.&nbsp;

IMF data shows the US Dollar is slowly losing its grip as the world’s reserve currency. It’s still the most held reserve currency but has been declining for 20 years.

IMF data shows the US Dollar is slowly losing its grip as the world’s reserve currency. It’s still the most held reserve currency but has been declining for 20 years. This trend continues even with the dollar strengthening recently. Central banks are diversifying their reserves, going into non-traditional currencies like the Australian dollar, Canadian dollar and Chinese yuan. It’s all about yield, diversification and ease of trading with new digital tech. Some think geopolitical tensions will speed up the decline of the dollar’s reserve status. But data shows this trend is bigger than just a few big reserve holders and includes most G20 economies. China has actively promoted the internationalisation of its currency. But despite that, the yuan’s share of global reserves has plateaued recently, mostly because of the recent depreciation of the currency. US financial sanctions have also impacted reserve management decisions. Central banks are slowly shifting away from currencies under sanctions, towards gold. Gold’s share of global reserves is still low historically, But some emerging market central banks are accumulating gold as a hedge against economic and geopolitical risks. IMF says the decline of the dollar’s dominance is a long-term process, not a sudden drop. While the dollar is still the most important reserve currency, central banks are looking to diversify their holdings. This ‘de-dollarisation’ trend is driven by yield, tech and geopolitical risk. Diversification is happening beyond major countries like Russia & China. 46 G20 countries are currently leading this shift away from dollar.

Dollar dominance fading? IMF data reveals falling share of US currency in global reserves

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