G-20 Finance Chiefs Pledge to Prioritise Implementation of National Growth Plans
G-20 finance ministers and central governors have pledged to take further steps to shore up the global economic recovery, including in the implementation of their national growth plans agreed in Brisbane over a year ago.
After meeting in the Chinese city of Shanghai on 27 February, the finance chiefs warned in their communiqué that the global economic recovery “remains uneven and falls short of our strong, sustainable, and balanced growth.”
The officials noted that growth is also facing significant risks, including volatile capital flows, depressed commodity prices, and geopolitical tensions ranging from the refugee crisis to the prospect of a potential British exit from the European Union. (For more on Brexit, see related article, this edition)
“Additionally, there are growing concerns about the risk of further downward revision in global economic prospects,” they said.
Indeed, recent updated growth projections from the International Monetary Fund (IMF) showed more dismal prospects than previously anticipated, with figures for 2016 and 2017 revised down to 3.4 percent in 2016 and 3.6 percent in 2017. (See Bridges Weekly, 21 January 2016)
The uneven nature of the global economic recovery has continued to dominate international gatherings since, including at the World Economic Forum’s Annual Meeting in Davos, Switzerland, last month. (See Bridges Weekly, 28 January 2016)
National growth plans
Given the current context, finance chiefs pledged they would adopt monetary, fiscal, and structural policy tools in a bid to promote increased growth and financial stability, while noting that “monetary policy alone cannot lead to balanced growth.”
Furthermore, the finance chiefs said they would use the coming year to “prioritise and put special emphasis” on setting into motion their adjusted national growth plans, which were designed and adopted in 2014 under the Australian presidency of the G-20 so that that the group might see a collective boost in GDP of two percent above current trajectories by 2018. (See Bridges Weekly, 20 November 2014)
Part of this effort will include putting together a set of “priorities” and “guiding principles” to serve as a point of reference in the implementation process. The finance officials also plan to develop indicators for assessment and monitoring.
G-20 finance officials have therefore asked that the “Framework Working Group” prepare policy papers related to such priorities and principles in time for their next gathering, scheduled for April in Washington, while also asking that the International Monetary Fund, the Organisation for Economic Co-operation and Development (OECD), and the World Bank Group prepare by July an update on implementation progress.
Furthermore, they noted, G-20 members will bring together their growth strategies with investment strategies, with a view “to enhance the efficiency of our efforts.”
Trade, investment, green finance
On trade, the group reiterated past pledges to “resist all forms of protectionism,” along with promising to explore policy options in both trade and investment, with help from international organisations.
Specific to investment, G-20 members “reaffirm[ed] our commitment to advancing the investment agenda with focus on infrastructure both in terms of quantity and quality aspects,” with the group noting also the results of last year’s Financing for Development (FfD3) Conference in Addis Ababa, Ethiopia – which among various other points called upon multilateral development banks to boost infrastructure development and take additional steps to address poverty. (See Bridges Weekly, 23 July 2015)
Among other pledges, the G-20 officials said they would kick off a “global infrastructure connectivity alliance initiative” in order to improve collaboration between infrastructure projects.
The 7-page communiqué, along with a host of other items, also includes paragraphs relating to climate change, green finance, and the phase out of inefficient fossil fuel subsidies. In the area of green finance, the group has set up a G-20 Green Finance Study Group that will be tasked with identifying “institutional and market barriers” and provide recommendations by this July for better mobilising private capital.
Ensuring developed countries provide developing economies with the financial support for climate adaptation and mitigation was also referred to in the outcome document, with a reminder that others are also “encouraged” to give such support on a voluntary basis.
Regarding fossil fuels, finance officials reiterated past commitments to “rationalise and phase out inefficient fossil fuel subsidies that encourage wasteful consumption, over the medium term, recognising the need to support the poor.” They also referred to a voluntary peer review of such subsidies, urging all members of the group to take part.
Lagarde calls for bold action
In a press release after the meeting, IMF Managing Director Christine Lagarde – who was recently confirmed for a second five-year term at the Washington-based organisation – praised the G20 members’ call for strengthened global growth. (See Bridges Weekly, 25 February 2016)
The Fund’s staff had prepared a note on “global prospects and policy challenges” ahead of the Shanghai meet, outlining the problems facing the global economy, and the vulnerability it currently has to negative shocks – both of economic and non-economic origins.
Calling for “bold, broad, and accelerated policy actions,” Lagarde urged G-20 members to use “all available policy tools” in their efforts to boost global growth, with steps at both the national and international level. Regarding the latter, these should involve “bold multilateral actions,” focusing on following through on previous commitments and ramping up efforts for meeting the 2018 growth goal.
ICTSD reporting; “G20 to say world needs to look beyond ultra-easy policy for growth,” REUTERS, 27 February 2016.