IMF Calls G20 to Addresses Global Trade Disputes

G20 Ministers and Central Bank Governors meeting in Argentina - Photo by IMF

JAKARTA (TheInsiderStories) – International Monetary Fund Director Christine Lagarde encouraged policy makers to address trade disputes in a “cooperative spirit” to minimize dampening global growth. She delivered the statement at the conclusion of the G20 Finance Ministers and Central Bank Governors Meeting in Buenos Aires, Argentina over the weekend.

“I urged once more that trade conflicts be resolved via international cooperation without resort to exceptional measures,” said Lagarde in a statement released on Sunday (22/07), following the close of the meeting. 

She stressed it, in many countries, especially in those with excess current account deficits, the countries should avoiding pro-cyclical fiscal policies to help put debt on a downward path and in excess surplus countries with fiscal space. It means, she continued, investing more in human and physical capital to raise potential output and catalyze private investment. These steps will also help to moderate global economic imbalances, she added.

“In response to the financial volatility, exchange rate flexibility should continue to play a role in buffering shocks in emerging economies, and prudential policies should address financial vulnerabilities everywhere,” said Lagarde. 

She encouraged that the G20 ministers and CB governors reaffirmed their commitment to a strong, quota-based, and adequately resourced IMF at the center of the global financial safety net. She look forward to returning to Argentina for the G-20 Summit in November.

Last week, over 55 senior officials are discussing the risks and opportunities of the world economy over a two-day’s G20 policy makers meeting. In a press statement on the concludes meeting, Minister of Finance Nicolás Dujovne and the President of the Argentine Central Bank Luis Caputo alluded to the role of the G20 in global governance and concurred on the contribution of trade to economies.

“We made huge progress and achieved tangible results. We restated that trade and investment are engines of growth, productivity, innovation, job creation and development,” said Dujovne, in reference to the discussions on the global economy.

He also highlighted the importance of “capturing private investment, which today amounts to US$80 trillion. Currently, according to him, only around 1.5 percent of this goes to infrastructure. He endorsed the guidelines that will help the G20’s countries build a portfolio of projects that are easier to finance.

The Argentine CB President also pointed to financial inclusion, which “contributes to growth and to better standards of living for all citizens.” In this regard, he added that “an emphasis was placed on digitalization and on the benefits it may bring, particularly for least developed countries, where informal sectors are a considerable component of the economy.” He defined “digitalization as a first step towards formalizing economies.”

Two more finance ministerial meetings are scheduled before the 2018 Leaders’ Summit: the fourth ministerial takes place on Oct. 11-12 in Bali, Indonesia, and the fifth and final ministerial is scheduled for Nov. 29 in Buenos Aires.

Full Statement

Global economic growth remains robust and unemployment is at a decade low. However, growth has been less synchronised recently, and downside risks over the short and medium term have increased. These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth, particularly in some advanced economies.

We look forward to the report by the FSB on policy development under its action plan to assess and To ensure the GPFI continues to make a positive contribution to financial inclusion, we ask that it considers where its work could be rationalised and prioritised. We also ask the GPFI to consider its current structure with a view to more closely aligning it with other working arrangements in the G20 finance track.

This includes combining the work of the four GPFI sub groups into one working group, appointment of working group co-chairs and changing its membership arrangements. We expect the GPFI to provide a roadmap requested changes in 2020. We look forward to the implementation of the outcomes of the April Paris Conference on Counter Terrorist Financing