By Banikinkar Pattanayak
AgenciesFM Sitharaman
Finance minister Nirmala Sitharaman on Tuesday said lending by multilateral development banks (MDBs) must be aligned with long-term development goals and supported by robust monitoring frameworks to ensure the funds are used for the intended purpose. Sitharaman’s statement comes weeks after India opposed lending to Pakistan by the International Monetary Fund (IMF) and the Asian Development Bank (ADB) in the aftermath of the Operation Sindoor. New Delhi had flagged the possibility of misuse of funds by Islamabad for state-sponsored cross-border terrorism and for increase in defence spending. The minister was speaking at the 4th International Conference on Financing for Development (FFD4) in Sevilla, Spain. The conference is mandated to support reform of international financial architecture. She pledged India’s support for reforms to the international financial architecture, including MDB reforms and fairer global credit rating systems, to boost inclusivity and equity. Last month, the ADB approved an $800-million programme “to strengthen fiscal sustainability and improve public financial management in Pakistan”. Live EventsIn May, amid a skirmish between India and Pakistan, the IMF board had cleared an extended fund facility lending programme of $1 billion to Islamabad. It had also approved a $1.4 billion credit line for climate resilience efforts.New Delhi has already questioned the efficacy of frequent bailouts for Pakistan, which has had disbursements from the IMF in 28 of the 35 years since 1989. In the last five years, there have been four IMF programmes to support it.Global financing frameworkIndia, the minister said, supports a comprehensive, equitable, and development-oriented global financing framework that respects country-specific circumstances, preserves their policy space, and delivers on the promise of sustainable development for all. “With many SDG targets off track and a financing gap exceeding $4 trillion annually for developing countries, the need for urgent and transformative action is clear,” she said. Through targeted policy interventions, India has lifted 250 million people out of multidimensional poverty, and empowered communities through inclusive digital public infrastructure, she said. But for robust global growth, the minister stressed, national efforts must be complemented by an enabling international environment, she said.“We remain committed to South-South and Triangular Cooperation. We support the call for a reversal in the decline of ODA (Official Development Assistance), and urge developed countries for enhancing climate finance that is predictable, accessible, and concessional—particularly for adaptation in vulnerable countries,” Sitharaman said.ODA is essentially financial assistance extended by developed countries to poor and developing nations with an aim to promote economic development. It mainly includes grants and loans. India supports international cooperation to modernize tax systems and curb illicit financial flows, she said. The country’s comprehensive tax reforms and digital transformation in tax administration have increased revenue and reduced compliance costs, the minister added. Optimal regulation fosters innovation and stability, Sitharaman said, adding that the Indian financial system promotes inclusivity through easier credit and lower compliance cost, especially for small and medium businesses. India has also developed a dynamic ecosystem for start-ups and public-private partnerships in infrastructure, she said.“India’s progress across all action areas of the Compromiso de Sevilla (or the Sevilla Commitment) demonstrates that developing countries can be both beneficiaries and drivers of global development finance,” she said.The ongoing conference in Sevilla has adopted the Sevilla Commitment or Compromiso de Sevilla, an outcome negotiated by various governments that lays the foundation for a renewed global framework for financing development.“India stands ready to lead by example, share its experiences, and collaborate with partners in advancing this agenda,” the minister said. “Let’s leave Sevilla with resolve — not just promises — to make financing the foundation for realizing the SDGs and leaving no one behind,” she added.(You can now subscribe to our Economic Times WhatsApp channel)
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(You can now subscribe to our Economic Times WhatsApp channel)Read More News onNirmala Sitharamanmultilateral development banksAsian Development BankInternational Monetary Fundfinancing for developmentsustainable development goalsOfficial Development Assistanceclimate financedigital public infrastructure(Catch all the Business News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online….moreless