Prof. J. D. Agarwal, Chairman & Director, Indian Institute of Finance, Delhi while delivering Keynote Speech at 4th International Conference in Finance, CHILE has emphasized that there is a need for developing the Regional Monetary Funds to monitor, regulate and suggest measures to the countries of the SAARC region. According to him, International Monetary Fund (IMF), which is currently viewed as a single global institution with no alternatives, should rather become an apex institution with a network of regional or sub-regional monetary funds.

According to Dr. Agarwal, India should take initiative to form sub-regional IMF-SAARC Monetary Fund to assess and help the member countries of this region as most of the other SAARC members are passing through financial crisis and need help to take care of their economic development.

Suggesting the need for a thorough reform of the IMF’s working and bringing flexibility into the package that keeps in mind the specific needs of the affected countries, Dr. Agarwal said that the working of IMF should be reviewed and it is not appropriate that the same set of conditionalities are recommended for every economy irrespective of its requirements as IMF package of reviving economies is often counter productive for most of the countries approaching IMF. According to him, IMF package uniformly insists on well tightening, devaluation and demand compression measures that affect growth adversely and hence make recovery even more difficult.

He has also suggested that there is a need for revival of SDRs fund allocations to supplement international liquidity. According to him, The institution of SDRs continues to be relevant, especially for developing countries and it should be restored as soon as possible by the IMF.