Opinion
The G20 meeting in Bengaluru made progress on major issues
Summary
Let’s acknowledge the advances made under India’s G20 presidency and not be misled by the mere lack of a joint communique.
The first ministerial meeting held under the Indian G20 presidency was the meeting of Finance Ministers and Central Bank Governors (FMCBG) held in Bengaluru in the last week of February. Naturally, expectations were high. As the curtains came down on the FMCBG meeting and no official Communique but only a Chair Summary cum Outcome Document was released, many commented that the ongoing war in Ukraine had stalled progress on India’s priorities under the G20 Finance Track in 2023. The reality, however, could not be further from the truth. In the current geopolitical context, what India could achieve in the form of a G20 Chair’s Summary and Outcome Document is significant. This article reviews some key accomplishments of the first FMCBG meeting under the Indian presidency.
Transboundary challenges such as climate change and pandemics have led to increased demand for the lending resources of multilateral development banks (MDBs). Advanced economies are keen that MDBs are reconfigured to address these global challenges. On the other hand, low-income and developing economies are equally keen that the calls for MDB reforms should preserve their current mandate of supporting development goals such as poverty eradication and other
Sustainable Development Goals, which continue to be critical investment areas in these economies. The February G20 Chair’s Statement and Outcome Document presents a balanced policy narrative and points to how the G20 intends to advance MDB reforms in a balanced manner.
Mobilization of finance for climate action has been a key global policy priority over the years. However, despite policy dialogues, there continues to be a gap between the current flow of climate finance and the amounts required for climate adaptation and mitigation in developing and vulnerable economies. For the first time in the G20 finance ministerial document, besides a call for stepping up climate finance and the need for fulfilling the climate finance commitments, ministers and governors have also articulated a need for the G20 to collectively work on developing options to support climate investments and transition activities that will include ways to expand risk-sharing facilities as well as policies and financial instruments to support private capital for investment in green and low-carbon technologies.
At the beginning of 2022, three in five of the world’s poorest countries were at high risk of debt distress or already in it, and every fourth middle-income countries was at high risk of a fiscal crisis. The global economy faced a growing debt problem even before the covid pandemic. However, the pandemic and recent geopolitical tensions have further exacerbated the crisis and pose the danger of global debt distress intensifying into a systemic crisis. There has also been a shift in the composition of official bilateral creditors away from traditional creditors that constitute the Paris Club and towards China, India and Saudi Arabia. In this February’s Outcome Document, ministers and governors have called for a swift conclusion of the debt treatment of countries seeking relief under the Common Framework. Consensus on this agenda is a landmark achievement. If G20 can push for swift resolution of some debt treatments this year, it can emerge as one of the most impactful legacies of the Indian presidency.
Innovations in India’s Digital Public Infrastructure ecosystem have played a catalytic role in enhancing financial inclusion and empowering the most vulnerable sections of the country’s population. The G20 presidency provides an excellent platform to showcase India’s DPI ecosystem to the global community and learn from others’ experiences as well, given DPI’s multiplier effects on growth and development. Recently, an event was hosted for the Global South under the aegis of the G20 presidency. Around 17 countries from low-income and developing countries participated in it to exchange experiences related to digital financial inclusion. The FMCBG Outcome Statement has indicated that in 2023, policy recommendations will be formulated to guide the global community on how digital public infrastructure can be leveraged to advance financial inclusion.
The cross-border and online nature of crypto assets makes international coordination and cooperation key to their effective regulation and supervision. This is especially so since several countries have allowed cryptocurrencies to be used in transactions, while some have completely banned it and a few have recognized it as legal tender. The Chair’s Summary and Outcome Document provides a clear policy signal from the G20 in support of the need for a coordinated and comprehensive approach to crypto assets.
The G20 FMCBG also sent a clear signal to the global community that the G20 in 2023 intends to make a strong pitch on key global issues through an inclusive and pragmatic approach while keeping the group’s focus on issues of key concern to the Global South. Support from member nations on all key priorities for G20 work in 2023 reflects the respect that the rest of the G20 members have for India. Therefore, rather than getting exercised about the name of the outcome document, we need to reflect on what the finance ministers and central bank governors had to say on key issues of today’s global policy discourse.
These are the authors’ personal views.
