Meeting in Jakarta on 17-18 February in a hybrid format, the Finance Ministers of the world’s 20 largest economies reported a continued but “asynchronous” economic recovery due to divergent access to Covid-19 vaccines and subject to “geopolitical tensions”.
In order not to hinder economic growth, the ministers commit to a “cautious” lifting of the emergency budgetary measures, in place since spring 2020, to tackle the pandemic, while stressing the importance of ensuring the long-term sustainability of public finances. To support our collective ambition to emerge from the crisis together and stronger, “we confirm our commitment for well-calibrated, well-planned, and well-communicated exit strategies”, they add in their statement.
SDR. Aid to vulnerable countries was one of the topics discussed in Jakarta, including the recycling of special drawing rights (SDRs) obtained by rich countries when the IMF’s capital was increased in 2021. Of the stated target of 100 billion SDR, commitments have now reached “$60 billion”, say the world’s top financiers.
Part of this aid will be channelled through a new facility being set up within the IMF, which could be operational by early 2023.
Inflation. Acknowledging that inflation is “currently high in many countries”, the G20 ‘Finance’ recognises that central banks will act, if necessary, to preserve price stability, in accordance with their mandate.
The FED’s announced rate hike in the US in 2022, and the ECB’s not ruling out action for the euro area, could result in a repatriation of capital to Western markets, a development feared by emerging countries.
Climate. On climate change, the ministers believe that policies to achieve climate neutrality must include fiscal, market and regulatory mechanisms, and provide for “the phase-out and rationalisation, in the medium term, of inefficient fossil fuel subsidies” while supporting vulnerable populations in the transition.
Finally, in the area of taxation and finance, the G20 Finance Group is keeping up the pressure so that the international tax reform agreed at the OECD in 2021 can be implemented worldwide in 2023 (see EUROPE 12871/2).
See the OECD report on taxation : https://aeur.eu/f/ep
Crypto-assets. In addition, the Financial Stability Board (FSB) is asked to “accelerate and deepen” work on how best to supervise crypto-assets to avoid regulatory loopholes and arbitrage.
We are seeing a “new tone” towards a market valued at $2.3 trillion which, according to the FSB, may pose “a risk to financial stability” as it spreads to individual investors and becomes more complex with the emergence of derivatives on crypto-assets, a French finance ministry source said on Wednesday 16 February before the start of the Jakarta meeting.
See the G20 Finance communiqué: https://aeur.eu/f/em (Original version in French by Mathieu Bion)