Staff Correspondent: Keeping in mind the economic challenges of the next 50 years, the International Monetary Fund (IMF) has suggested increasing investment in two sectors. One of these is the strong fundamentals of the economy i.e. deflation, safeguarding financial stability and transformational reforms.
The other is to increase funding for development partners to ensure external debt, climate change and financial security. The policy makers of the world are said to come forward to invest in these sectors.
These important proposals were made in the presence of the governors of the world’s central banks on the fifth day of the World Bank-IMF meeting held in Morocco.
It is said there, if investment in these sectors can be increased, the growth of many countries will reach 8 percent in the next four years. This information was obtained from the source of the meeting.
The concerned countries have been asked to bring reforms in the tax sector to raise investment funds. According to the IMF study, tax sector reform alone would increase revenue of 9 percent of GDP for New Income countries.
And in case of emerging countries, it will be equal to 5 percent. As a result, this area should be given more priority. Reform should be brought here.
It is known that in 1973, ie 50 years ago, the IMF held a meeting on the challenges of the world economy in this Morocco. After exactly 50 years, the annual meeting of World Bank and IMF is being held at the same place. During this time there were many ups and downs in the economy.
In that meeting, the present governors were asked to imagine what the world will be like in the next 50 years i.e. 2073. According to the organization, the global economy will face complex challenges in geopolitics and technology.
The IMF tried with the help of artificial intelligence (AI) to figure out what kind of challenges the economy might face in 1973. Based on the results obtained in the AI approach, the two priority sector investments are recommended for policymakers to address the challenges of the global economy.
In the meeting, IMF Managing Director Kristalina Georgieva said to the governors, “We have seen a period of instability. Especially the oil shock in the 70s, the Latin American debt crisis, the Asian financial crisis and the global financial crisis. In the past 3 years, we have also seen a global pandemic, war in Europe and a cost-of-living crisis. So, as a test, I asked … artificial intelligence! How can the world be in 2073? And there it is assumed that the year 2073 will be a sustainable prosperous world economy. There will be industrialization powered by renewable energy and artificial intelligence (AI).
Space exploration can open economic frontiers. Besides, digital currency can become mainstream instead of financial system. There, the policy makers of the respective countries are asked to think about how to capture the benefits of this global transformation. Also, its risks must be taken into consideration.
It is also said that there is a possibility of medium-term growth in the coming days. That is why the right policies and reforms are essential. For example, Morocco became an earthquake-ravaged region. Here were buildings with a strong foundation and structure. At best, many buildings were still standing after the shock of the earthquake. The lesson from this is that despite very different circumstances, it is possible to build strong economic foundations through sound policies by policymakers.
In the context of inflation, it was said that its stability is very important. Because controlling inflation saves people, especially the poor, from suffering. This means that the fight against inflation is paramount. Many countries around the world are still struggling with inflation. As a result, investment should be increased to control inflation in the future.
It is also said that financial stability needs to be maintained in the coming days. But further tightening of financial conditions will follow. Because of that, the market, banks and financial institutions may be hurt. This requires strong supervision.
Besides, the principle of prudence in revenue collection should be adopted. Because many countries now have a debt deficit. As a result, spending on the one hand has to be prioritized. On the other hand, the government has to take tough decisions.
The meeting highlighted the debt situation of donors and said that more than half of the New Income countries are still at high risk of debt crisis. About one-fifth of emerging economies have defaulted. However, the debt has gradually started to be restructured.
In such a context, it was announced at the annual meeting that the World Bank IMF will activate the direct lending program for poor countries. It is said that at the beginning of the epidemic, a million dollars was given in loans. In addition, 96 countries including 56 new incomes are being given loans of $32 thousand billion.
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