IMF concludes Article IV consultation for India

The International Monetary Fund (IMF) underlined on December 23 that additional monetary tightening should be carefully calibrated.

  • The IMF also expressed concern about rising inflation.
  • After concluding Article IV consultation for India, IMF said, domestically, rising inflation can further dampen demand and impact vulnerable groups.
  • On the upside, however, successful implementation of wide ­ranging reforms or greater­ than­ expected dividends from remarkable advances in digitalisation can increase India’s medium- term growth potential.

What is IMF-Article IV consultations?

  • When a country joins the IMF, it agrees to subject its economic and financial policies to the scrutiny of the international community.
  • The IMF’s regular monitoring of economies and associated provision of policy advice is intended to identify weaknesses that are causing or could lead to financial or economic instability. This process is known as surveillance.
  • Country surveillance is an ongoing process that culminates in regular (usually annual) comprehensive consultations with individual member countries, with discussions in between as needed.
  • The consultations are known as “Article IV consultations” because they are required by Article IV of the IMF’s Articles of Agreement.
  • During an Article IV consultation, an IMF team of economists visits a country to assess economic and financial developments and discuss the country’s economic and financial policies with government and central bank officials.

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