G-20 Finance Ministers discuss debt distress, Ukraine and other challenges in Washington

In their second meeting under India’s G-20 presidency, Finance Ministers discussed debt distress, challenges to the global economy, cryptocurrency and transparency in international taxation

Updated - April 14, 2023 12:11 pm IST

Published - April 14, 2023 07:35 am IST - WASHINGTON DC

Union Finance Minister Nirmala Sitharaman with Reserve Bank of India (RBI) Governor Shaktikanta Das co-chairs Day 1 of the G20 Finance Ministers and Central Bank Governors (FMCG) meeting in Washington DC on April 13, 2023.

Union Finance Minister Nirmala Sitharaman with Reserve Bank of India (RBI) Governor Shaktikanta Das co-chairs Day 1 of the G20 Finance Ministers and Central Bank Governors (FMCG) meeting in Washington DC on April 13, 2023. | Photo Credit: ANI

G-20 countries discussed the debt distress of poor and middle-income countries, challenges to the global economy, including Ukraine, and a raft of issues from cryptocurrency risk to transparency in international taxation, as the group’s Finance Ministers and Central Bank Governors (FMCBG) met in Washington DC on April 12 and 13.

This was their second meeting under the year-long G-20 presidency of India after the first meeting in February in Bengaluru.

Finance Minister Nirmala Sitharaman, who co-chaired the meetings with Reserve Bank of India Governor Shaktikanta Das, offered an optimistic picture of the discussions surrounding countries that are experiencing sovereign debt distress.  

Asked about the discussions around Ukraine and whether there would be a communique, Ms. Sitharaman indicated having a communique was not part of the agenda.

“In this meeting, I think we were very clear that we are not talking about a communique or a Chair’s Statement,” Ms. Sitharaman said at a press conference following the meeting, pointing to February’s Chair’s Statement.

The February meeting had an Outcome Document and Chair’s Statement (and not a joint communique), because Russia and China had opposed language around Russia’s invasion of Ukraine and no consensus could be reached around that part of the message.

The objective of this week’s meetings, as per a press statement, was to discuss progress made in the G-20 Finance Track on deliverables decided in the Chair’s Summary and Outcome Document from February.

ALSO READ | Nirmala Sitharaman urges G20 to come together on debt distress of middle-income countries

Thursday’s press statement made reference to Ukraine being discussed during the Global Economy and International Financial Architecture segment, one of three thematic pillars of the meeting.

“Members discussed the key challenges to the global economic outlook, including the war in Ukraine, food and energy insecurity, climate change, and recent risks to financial stability,” the press statement said. G-20 members agreed that the group could contribute to a common understanding on building a conducive environment for global economic recovery.

The G-20 FMCBG talks followed a ‘Global Sovereign Debt Roundtable’ (GSDR) that was held on Wednesday, April 12, co-chaired by the heads of the World Bank, IMF and Ms. Sitharaman. China, a key creditor for many of these distressed countries, had reportedly agreed to drop a key demand – that Multilateral Development Banks (MDBs), take a haircut on their loans to these countries as a condition for China to accept losses on the loans. Another longstanding criticism of Beijing’s lending practices has been their lack of transparency.

At Wednesday’s GSDR, Ms. Sitharaman had called for debt transparency “information sharing” and “clarity” on the processes, as well as timely restructuring.

“I expect a resolution for many of these countries,” Ms. Sitharaman said on Thursday. She highlighted some of the countries around the table at the latest discussions – Zambia, Sri Lanka, Ghana and Ethiopia.

“You mentioned specifically China, but I thought in the [debt] meeting, all were positively engaged,” she said in response to a question.

Discussions under the Sustainable Finance, Financial Sector, and Financial Inclusion pillar included mobilising finance for tackling climate change and global policy responses to crypto assets. Using Digital Public Infrastructure (DPI) for financial inclusion and enhancing productivity was also discussed, according to the press statement and Ms. Sitharaman’s summary of the meetings.

India, which has used DPI in areas such as delivering benefits, financial inclusion, and e-commerce, has been keen to take a lead on the adoption of DPI-based technologies in other countries, and there have been several discussions in Washington this week, both at think-tanks and within the World Bank-IMF institutions, on the Indian experience with DPI.

G-20 countries, as part of the discussion under the International Taxation pillar, discussed how to better implement an international taxation agreement from 2021 that seeks to distribute taxes from the largest multinational entities across countries and agrees on a global minimum tax for these entities. In the run-up to the meeting, G20 representatives also talked about the G20 roadmap on the Capital Adequacy Frameworks (CAFs) of MDBs, i.e., plans to ensure that the banks are adequately capitalised.

A third FMCBG meeting is scheduled for July 2023, in Gandhinagar.

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