The Finance ministers and central bank governors of G20 nations on Sunday decided to work towards lifting their collective GDP by more than two per cent over the next five years and exhorted the United States to go ahead with the IMF quota reforms.
“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than two per cent above the trajectory implied by current policies over the coming five years. This is over $2 trillion more in real terms and will lead to significant additional jobs,” said a communiqué released after the two-day G20 meet.
The group of 20 rich and developing nations said they “deeply regret” the stalling of IMF quota reforms with the United States yet to ratify them.
The IMF quota reforms, which seek to increase the voting share of emerging economies including India, had hit a roadblock with the US Congress refusing to increase the American contribution to the multilateral body.
“We deeply regret that the IMF quota and governance reforms agreed to in 2010 have not yet become effective and that the 15th General Review of quota was not completed by 2014,” the communiqué said.
Union Finance Minister P. Chidambaram said the communiqué fully reflected the concerns of the country.
“The communiqué has been drawn by the deputies sitting together and I think our concerns have been fully reflected in the communiqué,” he told PTI.
The communiqué said: “Our highest priority remains ratifying the 2010 reforms, and we urge the US to do so before our next meeting in April”.
It said that the growth target could be achieved by increasing investment, enhancing trade and lifting employment and there was “no room for complacency”.
As regards the tapering by the U.S. Federal Reserve, Mr. Chidambaram said the concerns of the emerging economies have been acknowledged by the G20 and it was “for the U.S. to follow up and address the concerns of the developing countries“.
Emerging economies, including India, have been asking the U.S., which has started gradual withdrawal of its fiscal stimulus, to be more predictable in monetary policy. The U.S. Federal Reserve’s tapering has caused flight of capital out of emerging economies and in turn hammering their currencies.
“All our central banks maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated, in the context of ongoing exchange of information and being mindful of impacts on the global economy,” the communiqué said.
The G20 countries also committed to develop new measures, for maintaining fiscal sustainability and financial sector stability, to significantly raise global growth.
As per IMF’s estimates, global growth is projected at about 3.7 per cent in 2014 and at 3.9 per cent in 2015.
On exchange of financial information, the G20 meeting decided to endorse the Common reporting Standard for auto exchange of tax information on a reciprocal basis.
“We expect to begin to exchange information automatically on tax matters among G20 members by the end of 2015. We call for the early adoption of the standard by those jurisdictions that are able to do so,” the communiqué said.
The G20 meet also had an extensive discussion on boosting investment, particularly in infrastructure, and agreed there is need for structural reforms to drive growth.
“We know reform is hard. We have to earn economic growth and new jobs... It will take concrete actions across the G20 to boost investment, trade, competition and employment opportunities, as well as getting our macroeconomic fundamentals right,” Australian Treasurer Joe Hockey, the G20 chair, was quoted by AFP as saying.