FM Nirmala Sitharaman advocates for fair sovereign ratings for developing economies at IMF meeting

During her address at the International Monetary Fund’s (IMF) 2024 Annual Meeting, Union Finance Minister Nirmala Sitharaman urged for fairness and accuracy in sovereign ratings for emerging markets and developing economies to enhance their access to capital. 

Speaking at the IMFC Plenary session in Washington, on October 25, Sitharaman emphasised the need for sovereign ratings to accurately reflect the economic fundamentals of these economies, which would help improve their ability to attract private investment. 

She called for stronger collaboration with credit rating agencies to refine rating methodologies, ensuring they more effectively capture a nation’s repayment capacity and economic resilience.  

Additionally, Sitharaman advocated for governance reforms within the IMF and other global institutions to better align with the changing global economic landscape, acknowledging the IMF’s expanded role over its 80-year history and the necessity for adaptation. 

The Finance Minister pointed out that in 2024, the global economy has demonstrated notable resilience, with some major economies nearing their output potential and overall inflation trending down towards central bank targets. 

“The Union Finance Minister said that in 2024 the global economy has shown remarkable resilience; while output is nearing its potential in some major economies, headline inflation has generally moderated and moved closer to the central banks’ targets. Still, FM said that there are several downside risks, including growing geo-political tensions and medium-term global growth prospects, are a concern due to their continued weakness,” Finance Ministry wrote in a post on X (formally twitter). 

However, she cautioned about various downside risks, including escalating geopolitical tensions and weak medium-term global growth prospects.  

Sitharaman expressed her support for the IMF's current Global Policy Agenda, which aims to secure a “soft landing” for the global economy and break the cycle of low growth and high debt. 

She reiterated the importance of the IMF's surveillance and policy guidance for countries facing debt vulnerabilities, advocating for the Fund to maintain impartiality in its policy advice.  

Furthermore, she praised the IMF’s efforts to foster unity in a fragmented world and encouraged the organization to remain flexible in areas like surveillance, lending, and capacity development to better serve its member nations.