G20 Finance Ministers, CB Governors, and leaders of International Organizations - Photo by G20

JAKARTA (TheInsiderStories) – Christine Lagarde, Managing Director of the International Monetary Fund (IMF) urged Group of 20 (G20) to make growth more resilient and more widely share.

The following statement issued on Tuesday (20/03) on the conclusion of the G20 Finance Ministers and Central Bank (CB) Governors Meeting in Buenos Aires, Argentine.

She said, the global economic recovery has continued to strengthen, with growth momentum involving more than 80 percent of total G20 GDP. This, Lagarde stressed it provides for very welcome jobs growth and room to undertake important reforms.

“As I have said before, we should fix the roof while the sun shines. Reform is all the more important because the cyclical forces carrying current growth will eventually wane and medium-term prospects remain weak, especially in advanced economies,” She said at the press statement received by TheInsiderStories.

Furthermore Lagarde stated, beyond the short term, risks are accumulating—for example, debt levels are high in advanced economies and continue to increase  in many emerging market and low-income countries. and global imbalances persist—and could be exacerbated by the policy mix in some of the major economies.

“I have emphasized that now is an opportune moment to implement reforms to make growth more solid, sustainable, balanced, and inclusive. I joined others in reiterating that we should avoid the temptation of inward-looking policies and, rather, work together to reduce trade barriers and resolve trade disagreements without resorting to exceptional measures,” Lagarde said.

She also emphasized the importance of addressing the buildup of debt in the public and private sectors, following a long period of easy financial conditions. This creates financial vulnerabilities, especially as monetary conditions tighten.

To mitigate these risks, Lagarde continued, countries should take advantage of the current momentum by building fiscal buffers—creating more room to act in the next downturn—and by making active use of macro- and micro-prudential policies. Flexible exchange rates can help mitigate external shocks.

She welcome the G20’s continued vigilance of capital flows and its call to enhance the transparency of low-income countries’ debt by both debtors and creditors.

“I am also encouraged that the G20 Ministers and Governors reaffirmed their commitment to a strong, quota-based, and adequately resourced IMF at the center of the global financial safety net,” says Lagarde.

G20 Communiqué 

The official communiqué of the G20 finance ministerial meeting, CB governors and international organization leaders addressed challenges posed by new technologies, infrastructure as an asset class, and crypto-currencies.

All parties sees global economic outlook has continued to improve since last met in Oct. 2017, with the broadest synchronized global growth upsurge since 2010, and a pick-up in investment and trade.

They welcome this progress, recent market volatility despite sound fundamentals of the global economy is a reminder of risks and vulnerabilities. Downside risks persist and, over the medium term, challenges remain to raise growth and make it more inclusive.

Argentine Treasury Minister, Nicolás Dujovne and President of the Central Bank, Federico Struzenegger told reporters all members agree to continue using all policy tools to support strong, sustainable, balanced and inclusive growth.

“We will implement structural reforms to enhance our growth potential. Fiscal policy should be used flexibly and be growth friendly, prioritize high quality investment, while enhancing economic and financial resilience and ensuring debt as a share of GDP is on a sustainable path. Strong fundamentals, sound policies, and a resilient international monetary system are essential to the stability of exchange rates, contributing to strong and sustainable growth and investment,” He said.

Other steps, flexible exchange rates, where feasible, can serve as a shock absorber. The minister and CB governors recognize that excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability.

Furthermore they said, technology, including digitalization, is fundamentally reshaping the global economy given its borderless and intangible nature, and its increasing ability to automate cognitive tasks.

“We are developing a common understanding of the nature of the changes and their potential implications. Transformative technologies are expected to bring immense economic opportunities, such as new ways of doing business, new industries, new and better jobs, and higher GDP growth and living standards,” He stated.

At the same time, the transition creates challenges for individuals, businesses, and governments. These include changes to labour markets, the growing importance of skills and adaptability, and the risk of increased inequality within and between countries.

Policy responses, including international cooperation, are needed to harness the opportunities and ensure the benefits are shared by all. We therefore agree to develop a menu of policy options for consideration at our meeting in July.

Infrastructure is critical to boost productivity, enhance connectivity, sustain long-term inclusive growth and provide our citizens with physical and digital access to the new economy. Despite its importance, a persistent infrastructure financing gap remains. Public financing of infrastructure is essential but mobilizing additional private capital is needed to meet global infrastructure needs.

“To achieve this, we agree to promote the necessary conditions to help develop infrastructure as an asset class. To guide our work, we endorse the Roadmap to Infrastructure as an Asset Class which builds on the outcomes of past G20 presidencies and draws together the steps needed to achieve our ambition,” the leaders said.

The Roadmap identifies seven work streams, including regulatory frameworks and capital markets, as well as quality infrastructure. In 2018, G20 focus under the Roadmap will be to improve project preparation, move towards greater standardization of contracts and infrastructure financing instruments, address data gaps, and improve risk mitigation, taking into account country-specific conditions.

“We reaffirm our support to the ongoing work of the Paris Club, as the principal international forum for restructuring official bilateral debt, towards the broader inclusion of emerging creditors. We support the provision of technical assistance by the IMF and the World Bank Group in debt recording and reporting in LICs, where needed, and look forward to the work of these institutions on debt transparency,” said them.

Furthermore, they said, the global financial system must remain open, resilient and supportive of growth and grounded in agreed international standards. We will continue to closely monitor and, if necessary, address emerging risks and vulnerabilities in the financial system.

They also concerned on Crypto assets and commited to raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing. Crypto-assets lack the key attributes of sovereign currencies.

Email: linda.silaen@theinsiderstories.com