High inflation leading to ‘coordination crisis’ between monetary and fiscal policy: IMF

BusinessHigh inflation leading to 'coordination crisis' between monetary and fiscal policy: IMF
- Advertisement -

In a session during the annual meeting of the World Economic Forum, he said that we have such a situation of inflation, which we have never seen.

Davos:

Gita Gopinath, Deputy Managing Director of the International Monetary Fund (IMF), said that due to the high inflation rate, a different situation has arisen in front of the global economy. Due to this, the problem of coordination between monetary and fiscal policies is being seen. In a session during the annual meeting of the World Economic Forum, he said that we have such a situation of inflation, which we have never seen.

He said it is coming down but still high. Due to this, ‘trouble’ is being seen between monetary policy and fiscal policy. Gopinath said, “You have to deal with inflation on the one hand. But on the other hand there are other problems including food and energy at different levels and for that fiscal policy is needed. This is making the current situation difficult.

He said the most important is inflation. Due to this, the effect of debt has been seen and its real value has come down. The Deputy Managing Director of the IMF said, “If you look at public debt globally in 2020, it had gone up to about 99 per cent of GDP (Gross Domestic Product). Now it has come down to 91 percent of GDP. One reason is revival and the other is inflation. Inflation has reduced the real value of debt.

He said that this is a difficult situation and countries have to see what is right. Fiscal policy has a role to play.

Gopinath said, “Stability in this (fiscal policy) is necessary to bring inflation under control. That means at least it didn’t grow. The second thing to keep in mind with fiscal policy is that you have to protect the most vulnerable sections of society and this will need to be done time and again, given the food and energy crisis. You need to provide the things which are necessary for the houses.

He said, “At the level of fiscal policy, the framework should be strong and things should be clear regarding debt reduction.”

Credit: ndtv.in /

- Advertisement -

Related Stories