NEW DELHI, May 7: The proposal to amend the articles of agreement of the International Monetary Fund (IMF) to incorporate capital account convertibility as one of the obligations for its membership is unfortunate, said the Federation of Indian Chamber of Commerce and Industry (Ficci) president AS Kasliwal.

Kasliwal stated that IMF board has agreed to amend its articles to make the promotion of capital account liberalisation a specific purpose of the International Monetary Fund to give it appropriate jurisdiction over capital movements.

He added that the scope of such jurisdiction would need to be carefully defined and sufficient flexibility should be allowed through transitional provisions and approval policies.

Kasliwal further said that the there are certain macro-economic parameters which need to be achieved before switching over to capital account convertibility, such as, sufficient foreign exchange reserves, low inflation, sustained buoyancy in growth and exports and stability in imports. He also said that most developing countries are passing through a critical phase and their macro-economic trends are gradually picking up.

At this juncture forcing them for capital convertibility would lead them to unnecessary pressure. "These crucial decisions should be left entirely to the country without any conditions imposed from outside", Kasliwal added. From the Indian point of view Kasliwal urged that such an important decision should be allowed to be taken in an Indian perspective rather than being dictated from outside.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.