24rd Sept, 2014
G20 meeting of Finance ministers and Central Banks Governors on 20-21 Sept, 2014 at Cairns was an important meeting. It made many policy commitments, which, if implemented, will help the world economy significantly.
G20 is the group of 20 important nations comprising of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union.
It has the 85% of the global GDP and 75% of the global trade.
This G20 meeting was chaired by Joe Hockey, Australian Treasurer. Indian Trade minister, Mrs Nirmala Sitharaman attended the meet. Reserve Bank of India Governor, Mr Raghuram Rajan also attended it. Finance minister, Arun Jaitley, could not attend it due to illness.
It has put out a communique at the end of the meet. Link is here: http://www.dailymail.co.uk/wires/reuters/article-2763870/TEXT-Communique-G20-Finance-Ministers-Central-Bankers-meeting.html
Salient outcome of the meeting:
- More than 900 policy initiatives, most of them new
- plans/policies to increase global GDP by 2% by 2018
- Plans/policies add $US2 trillion to global economy by 2018
- Plans to create millions of jobs
- Plans/policies to boost infrastructure investment, with creation of database to match quality projects and investors
- Labour market reform
- Policies to curb tax avoidance and evasion ie “black money”
Base Erosion and Profit Shifting (BEPS) action plan requires a commitment to finalising all action items in 2015. G20 meeting endorsed the finalised global Common Reporting Standard for automatic exchange of tax information on a reciprocal basis, providing an ability to tackle and deter cross-border tax evasion. Information exchange on this will begin automatically between each other and with other countries by 2017, subject to the completion of necessary legislative procedures.
Black money is a significant problem for many countries. India is a particular victim, but is not alone in this category. Curbing black money and bringing it back should help the national economies and their people. It is reported (http://www.theguardian.com/global-development/2014/sep/03/one-g20-cracking-down-corruption) that “black money” costs poorer countries a trillion dollars annually.
These policy decisions are good, but only time will tell whether each country implements them fully. Past experience suggests that the implementation of such decisions is less than desired.
Based on information from G20 Information Centre of University of Toronto (http://www.g20.utoronto.ca/), Australia implemented only 69% of its commitments, China 50%, and Saudi Arabia only 47%, after last year’s G20 summit in St Petersburg. Obviously, it will be better if these numbers are in the range of 90-100% bracket.
IMF-OECD expertise will be available to the member nations to monitor implementation of these policy commitments.
G20 Leaders’ summit is due to be held in Brisbane on 15-16th Nov, 2014. Indian Prime minister, Narendra Modi is attending this meeting. This will be the first visit to Australia by an Indian PM in the last 26 years. Late Sri Rajiv Gandhi was the last Indian PM who visited Australia.
Dr Yadu Singh/Sydney, Australia