Terming the Unified Payments Interface (UPI), a public sector initiative, Reserve Bank of India (RBI) Governor Shaktikanta Das said that it was not necessary that public goods could only be set up and financed by the public sector.
“In this regard, it is worthwhile to build innovative design features which private investors find attractive in financing GPGs,” Das said while delivering closing remarks at a G20 Finance Track National Event organised by the Finance Ministry and the RBI.
Keeping in mind very large investment requirements for setting up global public goods (GPGs), trigger financing could come from public investment, which would minimise risk and widen market access, Das said. “Subsequent financing needs can be met by the private sector.
This is where international capital flows and movements assume importance,” he said. The central bank head said that multilateral development banks could act as catalysts for private sector investments through risk-sharing methods.
While flagging harm caused by recent ruptures in global cooperation, Das said that a multilateral debt relief programme for targeted help to low-income countries needed to be urgently considered.The programme could be created with focus on utilising debt relief for sustainable development projects and poverty reduction efforts, Das said.“To this end, instruments such as debt-for-development swaps and green debt relief programmes could be employed,” he said.
Talking about the role of the World Bank and the International Monetary Fund in addressing global debt vulnerabilities, Das highlighted the adverse consequences of stigma associated with accepting certain arrangements from the global agencies.
“Further, Standby Arrangements (SBAs) are offered for countries with a balance of payments crisis; but SBAs come with performance benchmarks, and the attendant stigma,” Das said.
“This is an important issue, as the recent experience shows how the perceived stigma of and/or lack of access to IMF programmes can cause countries to seek support from other lenders rather than the IMF, with debt sustainability consequences,” he said.
Corrective measures, including financing, need to be implemented in a timely way that would provide more open access and help in removing stigma, Das said.
