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    Question

    In light of recent global economic developments

    (2024-25), a primary challenge for the International Monetary Fund (IMF) has been dealing with:
    A Managing sovereign debt distress in several low-income countries Correct Answer Incorrect Answer
    B Setting global accounting standards for banks Correct Answer Incorrect Answer
    C Regulating cross-border securities issuance Correct Answer Incorrect Answer
    D Direct financing of climate mitigation projects Correct Answer Incorrect Answer
    E Controlling global cryptocurrency markets Correct Answer Incorrect Answer

    Solution

    • Following the COVID-19 pandemic and the subsequent period of high global inflation and interest rates, many  low and middle-income countries are facing severe debt sustainability challenges . Countries like Sri Lanka, Ghana, Zambia, and Ethiopia have defaulted or are in debt distress. A key role of the IMF in this context is to  provide financial support through lending programs and to act as a catalyst and coordinator for debt restructuring negotiations  between borrowing countries and their creditors (both official bilateral lenders like the Paris Club and China, and private bondholders). This has been a dominant theme in global economic news.

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