Ethics & Governance Play Key Role in Accountancy Profession for Sustainable Economic Growth
Doha Bank CEO Dr. R. Seetharaman spoke at Institute of Chartered Accountants of India International Conference between 17th to 19 December 2020. The discussion was focused on “Accountancy profession: Role in Accelerating Global Economic Growth”. The conference was attended by Ministers of India, Member of Parliament, World Bank professional, Vice-Chairman HDFC Bank, Dean of Harvard Business School, CMD of Hindustan Unilever and other renowned senior management professionals of Indian Blue-chip companies.
Dr. R. Seetharaman gave insight on Global economies. He said “According to IMF October 2020, Global growth is projected at 5.2 percent in 2021. The Advanced economies growth is projected to strengthen to 3.9 percent and emerging and developing economies are expected to recover by 6 percent in 2021. The US economy is projected to contract by 4.3 percent in 2020, before growing at 3.1 percent in 2021. A deeper contraction of 8.3 percent is projected for the euro area in 2020, reflecting a sharper downturn than in the United States in the first half of the year. Inflation in the advanced economy group is projected at 0.8 percent in 2020, rising to 1.6 percent in 2021 as the recovery gains hold. In the emerging market and developing economy group, inflation is projected at 5 percent this year, declining to 4.7 percent next year.
Prospects for China are much stronger than for most other countries in this group. Oil extended gains toward $50 a barrel after OPEC+ reached a compromise deal to gradually taper production cuts this month. 2020 has been a historic year for gold and silver as unprecedented stimulus measures around the world were unleashed on financial markets. The dollar index is at 90.46 levels and is expected to fall further as fed continues its monetary easing. Crucial negotiations to secure a post-Brexit trade deal between the UK and the EU expected to happen. Global markets have surged in recent times after fall in April 2020 due to hopes of vaccine, cheering Joe Biden’s winning in US election.”
Dr. R. Seetharaman spoke on Indian economy, he said IMF expects India’s GDP growth to bounce back to 8.8% in 2021, one of the highest amongst in Emerging market and developing economies. The country has been stable with its credit ratings which is placed currently at investment grade at BBB-. India reported current account surplus of USD19.8BN which is 3.9% of GDP in June 2020. The RBI holds Forex reserves of USD568.5BN which is at new life-time highs as on November 6th 2020. The Indian banks also reported better results showcasing 1) Reduction in Slippages 2) Better recoveries 3) Strong growth in CASA mobilization lowering cost of funds and 4) Lower provisions. The FDI investments as per RBI reported is projected to be at USD42.6BN by the end of Fiscal year 2020-21. RBI has been supportive with frequent announcements of its purchases via open market operations, this has led to 10 year bond yields at 5.93%.
Dr. R. Seetharaman gave insight on Regional economies. He said “Qatar economy expected to contract by 4.5% in 2020 and recover by 2.5% in 2021. Qatar and other regional economies had witnessed economic reforms to recover from the COVID-19 as oil fell this year. Qatar central came with various procedures to combat the risk of coronavirus COVID-19 pandemic. This includes the emergency procedures, Loans and liabilities of sectors affected due to procedures taken to combat the spread of COVID-19, Guarantees for local banks and National Guarantee Program to support the private sector. In May 2020, the Public – private partnership law was introduced. The Private sector is expected to leverage from this new law. In October 2020, Qatar has allowed foreigners to own property. Qatar stock market has surged by close to 0.7 % YTD (As on closing of 15th December 2020) and has crossed 10k levels.”
Dr. R. Seetharaman said “Business organizations deserves ethical reasoning; business does not enjoy any special status and morality is as much applicable to it as to anyone else; and rules of ethics and morality are as much intrinsic to business as the rules of economy and free markets. Ethics contribute to long term success and hence youth should inculcate ethics in their lives. For business to operate successfully and in accepted manner these social interactions should provide mutual benefits and for that ethics is one key element that make these interactions mutually fruitful. Profit is no more considered as the sole objective of business. Instead of maximization of shareholders wealth now the focus of business organizations is on stakeholder approach many large business organizations are involved in socially responsible activities. Environmental issues are now openly discussed by business world. Framework of Corporate Governance has improved considerably. Business ethics is no more considered as an undesirable transgression into the functioning of business organizations. Instead organizations themselves are taking it seriously and now consider it as good for business.” It is also important to map the risks like operational risk, physical risk, market risk, financial risk, sales risk, strategic risk, credit risk, liquidity risk and funding risk. It is also important to scale the risk management up the value chain in four steps 1) Compliance & prevention 2) Operating performance 3) Shareholder value enhancement 4) Greater sophistication.
According to UNCTAD, The coronavirus crisis is pushing critical economic, social and environmental development targets beyond reach. The organisation’s online annual update tracking progress on a range of indicators of the UN’s sustainable Development Goals (SDGs) shows that poverty, inequality, the climate crisis, unsustainable production and other pressing challenges require even more urgent action due to COVID-19. For instance, SDG target aims to significantly increase the exports of developing countries, and in particular to double the share of least developed countries (LDCs) in global exports by 2020. The COVID-19 crisis offers opportunity, to build global economy back better. We need a green recovery connecting our recovery from the economic impacts of the pandemic to achieving our objectives under the Paris agreement and should ensure achievement of UN sustainable developments goals. Ethics and Governance plays key role in the accountancy profession thereby resulting in sustainable economic growth.