Russia-Ukraine war, Covid-19 surge in China on IMF-World Bank agenda

At the International Monetary Fund-World Bank Spring meeting next week, the agenda is likely to focus on how the world’s nations can negotiate the impact on supply chains and commodity prices due to Russia’s invasion of Ukraine. With the severe lockdowns in China due to a surge in Covid-19 cases, the joint resolution at the end of the summit will also be on the need to continue investment in health infrastructure. 

However, a key global issue, cryptocurrency regulations, will not feature in the agenda and are unlikely to be discussed on the sidelines as well, Business Standard has learnt.

Finance Minister Nirmala Sitharaman and Chief Economic Advisor V Anantha Nageswaran are expected to represent the government at the meeting, to be held in Washington DC from April 18-24. “Ukraine will clearly be the main focus of discussions. The participating nations will discuss the impact the war has had on global supply chains and commodity prices, and how world powers can work together to negate these effects,” said an official.

Another important set of discussions will be on further IMF quota reforms, the official added. Additionally, there could also be talks on the sidelines regarding India’s upcoming Presidency of G-20.

As war in Ukraine rages on, benchmark Brent and WTI crude oil prices continue to remain above the $100/barrel-mark, as OPEC says it may not be possible to replace potential supply losses from Russia.

Asian economies, which had earlier in the year escaped the skyrocketing inflation in western economies, are seeing prices rise as international price volatility seeps into domestic inflation. India’s consumer price index-based inflation jumped to a 17-month high of 6.95 per cent in March. This was the third straight month when retail inflation has been above the Monetary Policy Committee’s target of 4 (+/-2) per cent.

Meanwhile, United States Treasury Secretary Janet Yellen has urged the IMF and multilateral development banks to be modernised “so that they are fit for the 21st century”.

Nations also need to consider the governance of the IMF “to ensure that it reflects both the current global economy and also members’ commitments to the IMF’s underlying principles and objectives”, Yellen said on Wednesday, according to a Bloomberg report. She also warned that countries like China may face economic consequences due to its “relationship” with Russia. She did not mention India, which has so far abstained from voting against Russia at the United Nations.

Under such circumstances, the upcoming Spring Meetings of the Bretton Woods’ institution promises to be an interesting one.

China’s financial hub Shanghai on Thursday reported over 27,000 Covid-19 cases, including 2,573 symptomatic infections, a record number for a day, as President Xi Jinping said the country must continue with its strict “dynamic Covid clearance” policy and pandemic control measures. With many Chinese urban centres under lockdown, Covid will continue to be one of the more important topics at the IMF-World Bank meetings.

“There will be talks on continuing investment in health infrastructure, especially at the grassroots level,” the official quoted above said.

However, when asked on cryptocurrency, the official said it was unlikely to be brought up.

Though the government is now taxing crypto asset transactions, it has not yet tabled in Parliament the long-pending bill to regulate the sector. Sitharaman has said any attempt to regulate crypto assets will require a joint effort among nations. The Reserve Bank of India, meanwhile, is developing its own Central Bank Digital Currency.