Joint statement comes amid mounting anxiety over potential taper tantrum
India and the US have underscored the need for maintaining “supportive policies” until a strong and inclusive economic recovery is “firmly entrenched”.
Finance minister Nirmala Sitharaman and US treasury secretary Janet Yellen acknowledged the devastation caused by the Covid-19 pandemic and sought to bolster bilateral co-operation, at the eighth India-USA Economic and Financial Partnership meeting, held in Washington on Thursday. It was also attended by Federal Reserve chairman Jerome Powell and Reserve Bank of India governor Shaktikanta Das, among others.
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The joint statement comes amid mounting anxiety globally over potential taper tantrum once the US Federal Reserve begins to scale back its $120-billion-a-month quantitative easing, with many analysts expecting it to be as early as in November. In India, however, both the government and the Reserve Bank of India have hinted at an extended period of growth-supporting interventions.
Sitharaman and Yellen also pledged to boost cooperation in stemming illicit finance, money laundering and terror-funding, and highlighted the need for effective implementation of the standards stipulated by the Financial Action Task Force (FATF).
Importantly, the FATF – the Paris-based global body against money laundering and terror-funding – has retained Pakistan on its ‘grey list’ for its persistent failure to crack down hard on terror-financing.
“We continue to strengthen our cooperation in tackling money laundering and combating the financing of terrorism through increased information sharing and coordination,” according to the joint statement after the meeting.
“Both sides agree on the importance of fighting financial crimes and on the effective implementation of the Financial Action Task Force (FATF) standards to protect our financial systems from abuse,” it added.
Both Sitharaman and Yellen hailed the OECD/G20 Inclusive Framework political agreement on October 8 as representing a significant accomplishment for updating the international tax architecture to reflect the modern economy and establish an international tax system that is more stable, fairer, and fit for the 21st Century requirements.
“We take note of the progress made in sharing financial account information between the two countries under the Inter-Governmental Agreement under the Foreign Account Tax Compliance Act (FATCA),” according to the joint statement.
During the meeting, both India and the US also agreed on further engagements on financial-sector issues, including cross-border payments, payment systems and the development of the International Financial Services Centre.
They reiterated commitment to greater engagement, both bilaterally and multilaterally, to address global economic issues.
According to the joint statement, the meeting featured a session on climate finance, reflecting their respective commitments to driving urgent progress in combating climate change and the critical role of climate finance in achieving this shared global goal.
Separately, at the plenary meeting of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund (IMF), Sitharaman expressed concern over the stark differences in vaccination coverage of low-income and advanced countries and called for addressing vaccine inequity swiftly.
To win the war against Covid-19, “it is imperative that we freely share medical research and develop adaptive, responsive, affordable, and accessible health care systems”, the finance minister said.
Despite the pandemic, Sitharaman stressed, India continued its structural reforms. “Wide-ranging reforms, including in agriculture, labour and financial sector are expected to contribute towards acceleration of the economy,” she said.