IMF - Current Affairs Questions and Answers

ANSWER: Ageing

Explanation:
The International Monetary Fund (IMF) called on Asian economies to learn from Japan’s experience and act early to cope with rapidly ageing populations, warning that parts of the region risk getting old before becoming rich.

Asia has enjoyed substantial demographic dividends in the past decades, but the growing number of elderly is set to create a demographic “tax” on growth, according to the IMF.

Adapting to ageing could be especially challenging for Asia, as populations living at relatively low per capita income levels in many parts of the region are rapidly becoming old.

Some countries in Asia are getting old before becoming rich.

The population growth rate is projected to fall to zero for Asia by 2050 and the share of working-age people, now at its peak, will decline over the coming decades, the report said.

The share of the population aged 65 and older will increase rapidly and reach close to two-and-a-half times the current level by 2050, it said.

That means demographics could subtract 0.1 percentage point from annual global growth over the next three decades, it said.

The challenges are particularly huge for Japan, which faces both an ageing and shrinking population. Its labour force shrank by more than 7 per cent in the past two decades.

The high percentage of its citizens living on pensions may be behind Japan’s excess savings and low investment, which are weighing on growth and blamed in part for keeping inflation below the Bank of Japan’s 2 per cent target.

Japan’s experience highlights how demographic headwinds can adversely impact growth, inflation dynamics and the effectiveness of monetary policy.

The IMF called on Asian nations to make changes like introducing credible fiscal consolidation plans, boosting female and elderly labour force participation, and revamping social safety nets.

ANSWER: 6.6

Explanation:
IMF has cut down India's growth rate for the current fiscal year to 6.6 percent. The previous estimate was 7.6%.

The slowing of the growth rate is on account of temporary negative consumption shock of demonetisation after the WB decelerated India's growth estimates.

Growth forecast for the current and next fiscal year were trimmed by one percentage and 0.4 percentage points, due to temporary negative consumption shock .

This has been caused by cash shortage and payment disruption noted with recent currency note withdrawal and exchange, as per World Economic Outlook released by the IMF.

IMF also said after a lackluster outturn in 2016, economic activity will pick up in the next 2 years. This is more so for the emerging market and developing economies.

Global growth for 2016 is now 3.1 percent in line with the Oct 2016 forecast.

The economic activities in emerging markets and developing economies/EMDEs is to accelerate in 2017-2018 with global growth at 3.4 and 3.6 percent respectively.

India's growth in 2017 is projected at growth rate of 7.2% as against previous growth forecast of 7.6 percent.

Indian economy is expected to revive with 7.7% growth in 2018.

Cut in the growth rate comes after WB decelerated India's GDP growth for 2016-2017 fiscal to 7 percent from previous estimate of 7.6 percent citing impact of demonetisation.

India would regain momentum in coming years. India continues to be among the fastest growing countries in the emerging economies.

In 2016, China with a growth percentage of 6.7% has outperformed India. IMF has forecasted China's growth rate to 6.5% for 2017 based on continued policy support.

In 2018, China is projected to grow at 6 percent against India's 7.7%.

IMF: Know More

• Abbreviation stands for: International Monetary Fund
• Formation: 27 December 1945
• Type: International financial institution
• Headquarters: Washington, D.C., United States
• Membership: 189 countries
• Official language: English
• Managing Director: Christine Lagarde
• Main organ: Board of governors
• Parent organization: United Nations
• Staff: 2,700

ANSWER: Bernard Tapie

Explanation:
International Monetary Fund head Christine Lagarde was on 19th Dec 2016 convicted for negligence over a massive state payout to a tycoon when she was French finance minister.

Though convicted, she was not given a sentence.

The 2007 decision by Lagarde to permit a dispute over flamboyant businessman Bernard Tapie's sale of the Adidas sports brand to Credit Lyonnais bank to be resolved by private arbitration panel was under scrutiny.

The 60-year-old former corporate lawyer is also accused of failing to challenge the 404-million-euro (USD 422 million) award that emerged from the arbitration.

The payout raised concerns given Tapie's overt support for Lagarde's then boss, ex-president Nicolas Sarkozy, and it was subsequently cancelled by the courts.

Tapie had sold Adidas to Credit Lyonnais for the equivalent of 315.5 million euros in 1993.

The bank sold it on the following year for 701 million euros, prompting claims from Tapie that he had been cheated.

Another ex IMF head, Rodrigo Rato of Spain, is currently standing trial on charges of misusing funds when he was head of Spanish lender Bankia.

International Monetary Fund

• Abbreviation: IMF
• Formation: 27 December 1945
• Type: International financial institution
• Headquarters: Washington, D.C., United States'
• Membership: 189 countries
• Official language: English
• Managing Director: Christine Lagarde
• Main organ: Board of governors
• Parent organisation: United Nations
• Website: www.imf.org

ANSWER: Sri Lanka

Explanation:
IMF on June 7th 2016 approved the US $1.5 billion loan to Sri Lanka. IMF has transferred 168 million US dollars as the first instalment with immediate effect to provide support for the country’s economy

• IMF executive board accepted the 36 month extended arrangement under Extended Fund Facility with Sri Lanka under SDR
• With an early disbursement of 168.1 million US dollars to be made immediately, the remaining amount will be settled in 6 instalments on quarterly review
• Additional 650 million US dollars support will be brought to other multilateral and bilateral loans bring total support to US 2.2 billion US dollars

ANSWER: 7.5 percent

Explanation:
International Monetary Fund has retained growth forecast for India at 7.5 percent driven mostly by private consumption even as sluggish credit growth and weak exports impact the economy. India’s growth momentum is driven by private consumption benefiting from low energy prices and higher real incomes.

• IMF has said policy makers will speed up structural reform implementation- weak exports and sluggish credit growth stand in the way
• Additional steps in relaxing bottlenecks especially in mining and labour market reforms will increase labour market flexibility and foster inclusive growth.
• As per IMF, growth in Asia and Pacific will remain strong at 5.3 percent this year

ANSWER: IMF

Explanation:
Independent investor Sunil Sabharwal became the first Indian American to occur a key admin post at the IMF He assumed charge of the post of Alternate Executive Director of the IMF. This is one of the most important posts in the IMF. He has previously worked for GE Capital, Ogone and also worked for Warburg Pincus in an advisory capacity.

ANSWER: Christine Lagarde

Explanation:
Global economic growth will be disappointing within the year, according to head of IMF MD Christine Lagarde who said the prospect of rising interest rates in the US and economic slowdown in China would lead to economic vulnerability worldwide. Additionally, growth in global trade has lowered considerable and decline in raw materials is an issue for economies linked to these. Moreover, financial risks are rising in the emerging markets. Start of normalisation of the US monetary policy and shift towards consumption led growth were needed to be carried out smoothly.

ANSWER: Chinese yuan

Explanation:
Executive Board of IMF has decided to include the renminbi (yuan), into its basket of currencies that make up the IMF’s Special Drawing Right (SDR). The decision was taken during the IMF’s five-yearly review of the basket of currencies. SDR was created by IMF in the late 1960s and allows members to draw upon reserve currencies in the basket. Currently, these include dollar, euro, yen and pound sterling. Yuan will now be included from October 1, 2016.