Highlights from the G20

Nov 18th, 2008 5:31 PM UTC
By Beth Adler

I know that you have all been eagerly awaiting ONE’s analysis of the G20 economic summit that took place this past Saturday. To re-cap, in October, President Bush called for a first-ever meeting of the G20 to discuss solutions to the global financial crisis, and mechanisms to prevent future crises. The G20 is a group of finance ministers from the world’s leading economies (the G8, the European Union and Australia), as well as a group of ten emerging economies including Argentina, Brazil, China, India, and South Africa. After the summit, officials issued a communiqué detailing their resolutions. Here are a few highlights:

1. Developing Country Representation: The G20 calls for better representation of developing countries – both emerging economies and poor countries – in the Bretton Woods Institutions like the IMF and World Bank, in order to accurately reflect the world economy and increase the legitimacy and effectiveness of these institutions. The G20 calls for these reformed institutions to play a role in identifying future crises and responding to them.
2. Trade: The G20 rejects the impulse to turn to protectionist measures to stabilize their economies and promises to refrain from raising new barriers to trade or investment in the next 12 months. The G20 also calls for a successful completion to the World Trade Organization’s Doha Round trade talks.
3. Official Development Assistance (ODA): Considering the impact of the financial crisis on developing countries, and particularly on the most vulnerable in those countries, the G20 countries reaffirm the importance of the Millennium Development Goals (MDGs) and their development assistance commitments. They urge all countries to undertake commitments consistent with their capacities, and re-iterate the principles agreed upon at the UN Conference on Financing for Development that took place in Monterrey in 2002 that emphasize country ownership of and mobilizing all sources of financing for development.
4. Anti-Corruption: The G20 supports the efforts of the Financial Action Task Force that works to combat money laundering and terrorist financing. In addition, the G20 commends the work of the World Bank which is fighting corruption, drug-related activity, illegal arms trading and other illegal activities, and is repatriating stolen funds to developing countries, through the UN Stolen Asset Recovery Initiative (StAR).
5. Follow-up: The G20 Finance Ministers are required to follow up by March 31st, 2009; the G20 will meet again in April of 2009 in London. In preparation for this meeting, Finance Ministers will develop additional principles and recommendations to stem the global financial crisis. One of their tasks is to explore the mandates, governance, and resource requirements of the International Financial Institutions like the IMF and the World Bank. In addition, the G20 commits to the following concerning the reform of International Financial Institutions:

   • By March 31st 2009: The G20 will review the adequacy of the resources of the IMF, World Bank, and other multi-lateral development banks and be ready to increase resources if necessary. The IMF will also draw lessons from the current crisis and work with the Financial Stability Forum (another global body made up of central banks and ministries of finance) to integrate regulatory and supervisory measures into policy. The International Financial Institutions will review and adapt their lending mechanisms to meet the needs of their members in light of the current financial crisis, and explore ways to restore credit to emerging and developing countries in pursuit of sustainable growth and development, with a particular focus on investing in infrastructure.

   • The issue of reforming the Bretton Woods Institutions to give greater voice and representation to developing countries is listed as a medium-term priority for the G20.

Moving towards greater representation for developing countries in Bretton Woods Institutions like the World Bank and the IMF, and ensuring access to credit for developing countries, will help the developing world mitigate the effects of the financial crisis and prevent future crises. The G20 statement reaffirmed the importance of the Millennium Development Goals (MDGs) and development assistance; however, it did not go so far as to re-pledge to meet their respective aid commitments. In addition, the elimination of existing barriers to trade remains unaddressed.

As we’ve previously mentioned, this summit was a pre-cursor to the Financing for Development forum, which is a follow-up to the Monterrey meetings in 2002, that will take place in Doha at the end of the month. Stay tuned for more information.

ONE released a press statement about the outcomes from the G20 which you can check out for additional information.

-Beth Adler

TAGS: Development Assistance, G20, G8, IMF, IMF WB Spring Meetings, ONE, Policy News, President George W. Bush, World Bank