After days of grueling negotiations, the G20 nations adopted a ‘presidency summary’ that acknowledged a slightly improved global macroeconomic outlook but acknowledged that global growth remains sluggish and there are headwinds.
“Since we last met in October 2022, the global economic outlook has improved modestly. However, global growth remains sluggish and downside risks to the outlook remain, including high inflation, a resurgence of the pandemic, and tighter financial conditions that could worsen debt vulnerabilities in many emerging market economies and developing,” said the president’s summary at the end of the G20 Finance Ministers and Central Bank Governors (FMCBG) meeting in Bangalore on Saturday.
“Therefore, we reiterate the need for well-calibrated monetary, fiscal, financial, and structural policies to promote growth and maintain macroeconomic and financial stability,” he said.
India, as chair of the G20, was aiming for a communiqué, which is a stronger statement of intent. However, there could be no agreement on the issue as Russia and China objected to language condemning Russia’s invasion of Ukraine.
“Paragraphs 3 and 4 were exactly the same as those in the Bali leaders’ statement. He came forward for the statement, but two countries, Russia and China, had reservations. And therefore a Chairman’s Summary and a Statement of Results was issued,” Finance Minister Nirmala Sitharaman told a news briefing at the end of the FMCBG meeting.
The third and fourth paragraphs of the summary have remained largely unchanged: Russia-Ukraine from the November 2022 Bali Leaders’ Declaration, which was decided by the G20 heads of state.
He said the war is causing immense human suffering and exacerbating existing fragilities in the global economy, reiterating the United Nations resolution deploring “in the strongest terms the aggression of the Russian Federation against Ukraine.”
The Secretary for Economic Affairs also clarified at the press conference: “Russia and China were of the opinion that this forum of finance ministers was not the appropriate platform to discuss geopolitical issues. However, the other 18 countries said the war also had global economic consequences. They wanted the removal of the entire two paragraphs.”
The summary indicated that the G20 nations said they will prioritize temporary and targeted fiscal support to vulnerable groups while maintaining fiscal sustainability in the medium term.
“Central banks remain firmly committed to achieving price stability, in line with their respective mandates. They will ensure that inflation expectations remain well anchored and clearly communicate policy stances to help limit negative spillover effects between countries,” he said.
According to Finance Minister Nirmala Sitharaman, one of the successes of the meeting was that nations reached a common position on debt language.
“I was pleased that a common position on this language has been reached. It is important for us to emphasize why vulnerable countries are looking to the G20 to find some solution to alleviate their debt overhang. Many have been waiting for a long time. The G20 is now rising up to meet the challenges of the debt overhang,” said the Finance Minister.
According to the summary: “We recognize the urgency of addressing debt vulnerabilities in low- and middle-income countries. Strengthening multilateral coordination by official bilateral and private creditors is necessary to address the deteriorating debt situation and facilitate coordinated debt treatment for distressed countries.”
The G20 nations said they support all the commitments made in the Common Debt Treatment Framework and commit to intensify implementation of the framework in a predictable, timely, orderly and coordinated manner.
Sitharaman said the G20 nations are now seeking a speedy conclusion of work on debt treatment for Zambia, Ethiopia, Ghana and Sri Lanka.
Another success at the meeting came in cryptocurrencies, according to FM Sitharaman and Reserve Bank of India (RBI) Governor Shakktanta Das.
“I am happy to say one thing, there is an almost clear understanding that anything that is not issued by a central bank is not a currency. And this is a position that India has been taking for a long time and we are pleased that that position of India is now also receiving recognition from many different members.”
Sitharaman said side events on crypto assets are proposed at the IMF and World Bank Spring Meetings in April in Washington and in July in Gandhinagar.
“There is now widespread recognition and acceptance of the fact that cryptocurrencies, crypto assets, or crypto products, or whatever they are called, carry a number of significant risks to financial stability, monetary systems, cyber security issues, and to the general financial stability and should be examined. In the future, the effort is to develop an international framework, an international architecture to deal with this problem,” Das said.