G20 nations adopt 'chair summary' after Russia, China opposition

After days of grueling negotiations, the G20 nations adopted a ‘chair summary’ which recognised a slightly improved global macroeconomic outlook but acknowledged that global growth remains slow and there are headwinds.

“Since we last met in October 2022, the global economic outlook has modestly improved. However, global growth remains slow, and downside risks to the outlook persist, including elevated inflation, a resurgence of the pandemic and tighter financing conditions that could worsen debt vulnerabilities in many Emerging Market and Developing Economies,” said the chair summary at the end of the G20 meeting of Finance Ministers and Central Bank Governors (FMCBG) in Bengaluru, on Saturday.

“We, therefore, reiterate the need for well-calibrated monetary, fiscal, financial, and structural policies to promote growth and maintain macroeconomic as well as financial stability,” it stated.

India, as G20 President, was aiming for a communique, which is a stronger statement of intent. However, there could be no agreement on the issue since Russia and China were opposed to the language of condemnation of the former’s invasion of Ukraine.

“Paragraphs 3 and 4 were exactly the same as that of the Bali leaders’ declaration. It was introduced for the communique, but two countries -Russia and China had reservations. And therefore, a chair summary and outcome statement was issued,” Finance Minister Nirmala Sitharaman said at a media briefing at the conclusion of the FMCBG meeting.

The third and fourth paragraphs of the summary have been largely unchanged -- Russia-Ukraine from the Bali Leaders Declaration of November 2022, which was decided upon by the G20 heads of states.

It said that the war is causing immense human suffering and exacerbating existing fragilities in the global economy, and reiterated the United Nations resolution which deplored “in the strongest terms the aggression by the Russian Federation against Ukraine.”

Economic Affairs Secretary further clarified in the media briefing: “Russia and China were of the view that this forum of finance ministers was not the right platform to discuss geopolitical issues. However, the other 18 countries said that the war had global economic consequences as well. They wanted removal of the entire two paragraphs.”

The summary stated that the G20 nations said that they will prioritise temporary and targeted fiscal support to vulnerable groups while maintaining medium-term fiscal sustainability.

“Central banks remain strongly committed to achieving price stability, in line with their respective mandates. They will ensure inflation expectations remain well anchored and will clearly communicate policy stances to help limit negative cross-country spillovers,” it said.

According to Finance Minister Nirmala Sitharaman, one of the successes of the meeting was that the nations arrived at a common position on the debt language.

“I was glad a common position has arrived on this language. It is important for us to emphasise because vulnerable countries are looking at G20 to find some solution to relieve their debt distress. Many have been waiting for a very long time. G20 is now standing up to meet the challenges of debt distress,” the Finance Minister said.

According to the summary: “We recognise the urgency to address debt vulnerabilities in low and middle-income countries. Strengthening multilateral coordination by official bilateral and private creditors is needed to address the deteriorating debt situation and facilitate coordinated debt treatment for debt-distressed countries.”

The G20 nations said that they stand by all the commitments made in the Common Framework for Debt Treatments and commit to stepping up the implementation of the framework in a predictable, timely, orderly and co-ordinated manner.

Sitharaman said that the G20 nations are now looking for a swift conclusion of the work on debt treatment for Zambia, Ethiopia, Ghana and Sri Lanka.

Another success at the meeting came on cryptocurrencies, according to FM Sitharaman and Reserve Bank of India (RBI) Governor Shaktikanta Das.

“I am glad to say one thing, there is almost a clear understanding that anything not issued by a central bank is not a currency. And this is a position that India has been taking for a very long time and we are glad that such a position of India is now getting also acknowledgment from many different members.”

Sitharaman said that side events are proposed on crypto assets at the IMF-World Bank Spring Meetings in April in Washington and in July in Gandhinagar.

“There is now wide recognition and acceptance of the fact that cryptocurrencies, or crypto assets, or crypto products, or by whatever name you call it, they involve several major risks to financial stability, to monetary systems, to cyber security issues, and to overall financial stability and they need to be looked at. Going forward, the effort is to develop an international framework, an international architecture to deal with this problem,” Das said.