IMF Bailout to Sri Lanka
Context:
The International Monetary Fund (IMF) announced a staff-level agreement with Sri Lanka, months after the island nation’s economic crisis intensified this year, following a serious Balance of Payments problem.
Relevance:
GS II: International Relations
Dimensions of the Article:
- What is the staff-level agreement?
- Is the $2.9-billion a bailout package?
- About International Monetary Fund (IMF)
What is the staff-level agreement?
- It is a formal arrangement by which IMF staff and Sri Lankan authorities agree on a $2.9-billion package that will support Sri Lanka’s economic policies with a 48-month arrangement under the Extended Fund Facility (EFF).
- However, even though the IMF has agreed to support Sri Lanka, the EFF is conditional on many factors.
- Sri Lanka must take a series of immediate measures that the Fund has deemed necessary to fix fiscal lapses and structural weaknesses — such as raising fiscal revenue, safeguarding financial stability and reducing corruption vulnerabilities.
- Apart from making domestic policy changes to strengthen the economy, Sri Lanka must also restructure its debt with its multiple lenders.
- The IMF has said that it will provide financial support to Sri Lanka only after the country’s official creditors give financing assurances on debt sustainability, and when the government reaches a collaborative agreement with its private creditors.
Extended Fund Facility:
- The EFF was established to provide assistance to countries experiencing serious payment imbalances because of structural impediments or slow growth and an inherently weak balance-of-payments position.
- An EFF provides support for comprehensive programs including the policies needed to correct structural imbalances over an extended period.
Is the $2.9-billion a bailout package?
- The $2.9 billion agreed upon by both sides, is short of Sri Lanka’s expectations of support totalling $3 to $4 billion.
- In any case, even if the IMF package arrives swiftly, subject to Sri Lanka’s success with the “prior actions” spelt out by the Fund, it cannot “bailout” Sri Lanka.
- After a pre-emptive sovereign default in April — the island’s foreign debt totals $51 billion — Sri Lanka is still grappling with its Balance of Payments crisis.
- The government has resorted to wide import restrictions, while exports remain limited to the country’s traditional basket of tea, garments, and spices.
- From the ordinary citizen’s point of view, cost of living is soaring.
- Headline inflation went up to 64.3% in August 2022, and food inflation increased to 93.7%.
- The World Food Programme estimated that about 30% of Sri Lanka’s population, became food insecure, since the crisis worsened this year.
About International Monetary Fund (IMF)
- The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C.
- It consists of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. It periodically depends on the World Bank for its resources.
- Through the fund and other activities such as the gathering of statistics and analysis, surveillance of its members’ economies, and the demand for particular policies, the IMF works to improve the economies of its member countries.
Functions of the IMF
- To provide financial assistance to member countries with balance of payments problems, the IMF lends money to replenish international reserves, stabilize currencies and strengthen conditions for economic growth.
- Countries must embark on structural adjustment policies monitored by the IMF.
- It oversees the international monetary system and monitors the economic and financial policies of its 189 member countries.
- As part of this process, which takes place both at the global level and in individual countries, the IMF highlights possible risks to stability and advises on needed policy adjustments.
- It provides technical assistance and training to central banks, finance ministries, tax authorities, and other economic institutions.
- This helps countries raise public revenues, modernize banking systems, develop strong legal frameworks, improve governance, and enhance the reporting of macroeconomic and financial data.
- It also helps countries to make progress towards the Sustainable Development Goals (SDGs).
Coarse Cereals
Context:
Government push to coarse cereals as climate change affects wheat, paddy cultivation.
Relevance:
GS III: Agriculture
Dimensions of the Article:
- What are Coarse Cereals?
- Significance
- Why has the Government changed its attention to Coarse Cereals?
What are Coarse Cereals?
- The country’s agroclimatic zones with limited resources have traditionally grown coarse cereals.
- Agroclimatic zones are geographic areas with predominant climates that are ideal for a particular range of crops and cultivars.
- Sorghum, pearl millet, maize, barley, finger millet and other small millets such as kodo millet, little millet, foxtail millet, proso millet and barnyard millet together called coarse cereals.
- Coarse Cereals Producing States: Karnataka, Rajasthan, Puducherry, Maharashtra, Madhya Pradesh, Uttar Pradesh etc.
Uses of Coarse Cereals:
- The cultivation of Millets like sorghum and pearl millet in some Northern States like Haryana, Punjab and Western UP is primarily done for fodder purposes.
- The demand for coarse cereals for animals and poultry feed is on the rise.
- In India, feed requirements are met from waste food grains in general and made especially from coarse cereals.
- Maize is the preferred carbohydrate source in poultry feed.
Significance:
- Coarse cereals are renowned for their high nutrient content and for having traits such as resistance to drought, climate change and photosensitivity.
- These crops also have a bright future as a prospective exportable product and in the food processing sector.
- Their cultivation for human consumption, feed & fodder for livestock & poultry, use as fuel, and industrial uses is prevalent in drought-prone locations.
- They are a great weapon against malnutrition because of their high nutritional value.
- It aids in creating jobs in low-rainfall locations when there are few other alternative crops that can be utilised as a backup crop.
Why has the Government changed its attention to Coarse Cereals?
- The country’s output of wheat and paddy has been impacted by climate change, signalling a need to shift the emphasis to coarse cereals.
- Due to unpredictable weather patterns, the cultivation of wheat and paddy will not be sufficient to meet the country’s food needs.
- The government’s fear about the Kharif season production has grown due to the unpredictable monsoon of 2022.
- In the majority of areas in 2022, paddy and pulse sowing was severely impacted.
- The traits of coarse cereals include resistance to drought, climate change and photosensitivity.
- Compared to summer paddy farming, it is less expensive to cultivate, and it uses less water for irrigation.
- In 2022, 17.63 million hectares of coarse cereals were sown, compared to 16.93 million hectares in 2021.
- The nation currently produces 50 million tonnes of coarse cereals.
- The most common crops are millets and maize.
G-20 Education Ministers Meeting
Context:
Recently, the Minister of Education addressed the G-20 Education Ministers’ Meeting in Bali, Indonesia.
Relevance:
GS II: International Relations
Dimensions of the Article:
- Key Highlights of the Meeting
- About G20
- Structure and functioning of G20
Key Highlights of the Meeting:
- Theme: Recovery, Re-imagine and Rebuild Stronger.
- The G20 presidency is scheduled to move from Indonesia to India in December 2022.
- It Emphasized on the importance of sharing mutual experiences & working together to create a new world in which education remains the nodal point for addressing common challenges.
- The National Education Policy 2020, based on the foundational principles of access, equity, quality, affordability and accountability is India’s guiding light for promoting lifelong learning opportunities and achieving the shared vision of G20.
- Highlighted India’s rapid strides towards building a more resilient and inclusive education and skilling ecosystem and realising the creative potential of each learner through the implementation of NEP 2020.
- India is giving special emphasis on formalizing early childhood care & education, supporting differently-abled children, boosting digital and multi-modal learning, flexible entry-exit pathways, integrating education with skills, which are keys to improve learning outcomes.
About G20
- The G20 is an informal group of 19 countries and the European Union, with representatives of the International Monetary Fund and the World Bank.
- The G20 membership comprises a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, 80% of global investment, over 75% of global trade and roughly half the world’s land area.
- The members of the G20 are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union.
- Spain as a permanent, non-member invitee, also attends leader summits.
Structure and functioning of G20
- The G20 Presidency rotates annually according to a system that ensures a regional balance over time.
- For the selection of presidency, the 19 countries are divided into 5 groups, each having no more than 4 countries. The presidency rotates between each group.
- Every year the G20 selects a country from another group to be president.
- India is in Group 2 which also has Russia, South Africa and Turkey.
- The G20 does not have a permanent secretariat or Headquarters.
- The work of G20 is divided into two tracks:
- The Finance track comprises all meetings with G20 finance ministers and central bank governors and their deputies. Meeting several times throughout the year they focus on monetary and fiscal issues, financial regulations, etc.
- The Sherpa track focuses on broader issues such as political engagement, anti-corruption, development, energy, etc.
- Since 2008, the group convenes at least once a year, with the summits involving each member’s head of government.
What Is Kurki?
Context:
Recently, A 65-year-old farmer, died by suicide outside the office of the Muktsar DC. He had been sitting on a dharna outside the administrative complex against kurki orders for his land based on a court case filed against him by the local moneylender for defaulting on loan payment.
Relevance:
GS II: Polity and Governance
Dimensions of the Article:
- What is kurki?
- How is kurki executed?
- Why has a total ban on the century-old kurki law not been achieved?
- What is the ground reality?
What is kurki?
- Kurki means attachment of a farmer’s land, already pledged to the money lending institution or individual, in case of a loan default.
- Apart from banks, private moneylenders, commission agents also get these decrees against farmers from time to time.
How is kurki executed?
- Kurki orders are executed under Section 60 of Civil Procedure Code, 1908.
- The land which is pledged by the farmer to the bank or money lender gets registered in their name.
- In some cases, the land is auctioned as well.
- The process begins after the money lender moves court to get kurki orders in case the farmer is unable to pay back his loan.
- In kurki, attachment of farmer’s land as well as his tractor can be done as per the Section 60.
Why has a total ban on the century-old kurki law not been achieved?
- A plea filed in the Punjab and Haryana High Court in 2018 sought complete ban on kurki.
- However, the Punjab government in its affidavit stated that there was no need to ban kurki as relief was being given to farmers in terms of loan waiver, compensation etc.
- Moreover, it stated that Section 60 of Civil Procedure Code, 1908 – under which kurki takes place — was over 110 years old and needed complete revision.
What is the ground reality?
- Farmers point out that they are made to give post-dated cheques for loan, which are then used to get arrest orders issued in cheque bounce cases.
- They have also accused money lenders of using pronotes signed by them to get kurki orders.
- “Pro-notes” (promissory notes) are written documents taken from farmers, and signed by them at the time of giving the loan.
- In April 2022, over 2,000 arrest warrants were issued against farmers for non-payment of loans to cooperative societies and Punjab agriculture development banks.
- Meanwhile, over Rs 3,200 crores is outstanding against farmers’ names in cooperative societies and Punjab agriculture development banks and over 60% of farmers haven’t paid even a penny for the past three years, sources revealed.
Ramon Magsaysay Award
Context:
Recently, Former Kerala health minister K K Shailaja has declined her nomination for the 2022 Ramon Magsaysay Award, considered to be Asia’s equivalent to the Nobel Prize.
Relevance:
GS I: Personalities in News
Dimensions of the Article:
- Who was Ramon Magsaysay?
- The Ramon Magsaysay Award
- Indian winners on the list
Who was Ramon Magsaysay?
- Born on August 31, 1907 to a father who worked as a blacksmith and a mother who was a teacher, Ramon del Fierro Magsaysay Senior was the seventh president of the Philippines, from 1953 until his death in an air crash in 1957.
- Magsaysay started out as an automobile mechanic before being drafted into the Pacific War (1941-1945), during World War II.
- The Pacific War would see the Japanese occupation of the Philippines — then a colony of the US — for nearly four years. The US formally recognised the Philippines as an independent nation in 1946.
- As a guerrilla leader resisting the Japanese occupation, Magsaysay’s bravery and leadership saw his appointment as a military governor.
- In 1946, he would be elected under the Liberal Party to the Philippine House of Representatives, where he would serve two terms as a Congressman before being appointed secretary of National Defence in 1950.
- On December 30, 1953, he would be elected president from the Nationalist Party, the oldest political party in the Philippines.
The Ramon Magsaysay Award
- In 1957, the Ramon Magsaysay award was set up by trustees of the Rockefeller Brothers Fund and the Philippine government to carry forward Magsaysay’s legacy of service to the people, good governance, and pragmatic idealism.
- In the six decades since 1958 — the first year the Award was given out — over 300 organisations and individuals have been recognised for their developmental endeavours crucial to Asia, and, consequently, to the world.
- The award is given out every year on August 31, on Magsaysay’s birth anniversary.
Indian winners on the list
- Prominent Indians who have won the award include Vinoba Bhave in 1958, Mother Teresa in 1962, Kamaladevi Chattopadhyay in 1966, Satyajit Ray in 1967, Mahasweta Devi in 1997.
- In recent years, Arvind Kejriwal (2006), Anshu Gupta of Goonj (2015), human rights activist Bezwada Wilson (2016), and journalist Ravish Kumar (2019) have won the award.
