G20: How India navigated key global economic issues at recent meetings?

There is a consciousness that crypto assets, particularly those not backed by any sovereign assets, can themselves cause macroeconomic instability, according to the finance ministry.

The 100th meeting of the Group of Twenty (G20) under India’s presidency gets underway in Varanasi this week, with 12,300 delegates from 110 nationalities having already attended related talks so far.

Finance Minister Nirmala Sitharaman and other officials were in Washington last week to participate in G20 events on the sidelines of the International Monetary Fund and World Bank Group spring meetings.

G20 is the premier forum for international economic cooperation, which plays an important role in shaping and strengthening global architecture and governance on all major international economic issues.

Its summit is held annually, under the leadership of a rotating Presidency. India is President of the G20 from December 1, 2022 until November 30, 2023.

The second meeting of G20 Finance Ministers and Central Bank Governors (FMCBG), chaired by Finance Minister Nirmala Sitharaman and Reserve Bank of India Governor Shaktikanta Das, discussed key challenges to the global economic outlook and possible areas of policy coordination on pressing issues.

The next FMCBG meeting will be held in Gandhinagar in July, followed by the leaders’ summit in September in New Delhi.

G20 is focused on macroeconomic issues, trade, climate change, sustainable development, health, agriculture, energy, environment, climate change, and anti-corruption efforts. Moneycontrol takes stock of important interventions by India at recent meetings of the group.

Voice of the Global South

India’s G20 presidency has received support from member and guest countries for its inclusive, ambitious, action-oriented and decisive agenda. India is also focused on amplifying the voice and concerns of the Global South and developing countries.

Prime Minister Narendra Modi chaired the Voice of Global South Summit in January attended by 125 countries, including 18 at the head of the state level and others at the ministerial level. African participation at this G20 is also the highest ever.

India reiterated its commitment to exploring solutions to pressing global challenges, which disproportionately harm the poorest and most vulnerable, according to the finance minister.

Clarity on crypto

Sitharaman last week emphasised that crypto assets are an issue that requires immediate attention from G20. The collective response has to ensure that countries do not lose any potential benefits while protecting their economies from harm, she added.

India, which has taxed digital assets locally, has proposed regulation at a global level, which is finding greater acceptance among G20 members.

“G20 and its members agree that it'll not be possible for a single country to deal with crypto assets,” according to the finance ministry. “There has to be a coordinated global understanding to regulate crypto assets. There is a consciousness that crypto assets, particularly those not backed by any sovereign assets, can themselves cause macroeconomic instability.”

With the IMF and the Financial Stability Board both working on papers on crypto assets, a synthesis is expected to be readied.

During the FMCBG, members discussed the macroeconomic and financial challenges posed by the crypto assets ecosystem and exchanged views on potential global policy responses, taking into account the risks, especially to emerging markets and developing economies.

The consensus on having a globally coordinated repose was reached at an earlier round in Bengaluru.

Also read: India must drive global efforts for a green hydrogen economy during its G20 presidency

Debt conundrum

The Global Sovereign Debt Roundtable, co-chaired by the finance minister, the IMF managing director and the World Bank president, discussed the debt landscape and ways to address debt-restructuring challenges.

Sitharaman emphasised India's commitment as part of its presidency to all global efforts to address growing debt vulnerabilities and welcomed the partnership of the IMF and the World Bank to advance the agenda.

She also called for timely debt restructuring as a solution to the global debt crisis, something that is closely intertwined with addressing the global poverty challenge.

“As a priority for the G20 India presidency, Nirmala Sitharaman said that there is need to augment present global efforts, including those of the G20 to address growing debt distress across the globe,” according to the finance ministry.

The minister stressed debt transparency, information-sharing, clarity on the comparability of treatment, and predictability and timeliness of the debt restructuring process. She also said it was important to devise a way to assess and enforce the timelines for the steps involved in debt restructuring.

The Global Sovereign Debt Roundtable included the so-called Paris Club and non-Paris Club creditors, debtor countries, and representatives of the private sector.

The IMF, the World Bank and India are expected to continue to work together to further support the international response to current debt challenges.

Also read: World Bank, IMF Spring Meetings 2023: What did FMs, central bank governors discuss?

Multilateral banks, climate finance

The Indian presidency's focus has also been on the important agenda around reforming and strengthening multilateral development banks to address challenges of the 21st century, including economic development and climate finance.

G20 meetings have centred on the mobilisation of resources for climate change and the role of the multilateral financial institutions in catalysing flows for Sustainable Development Goals.

“Discussion of climate finance is moving in a positive direction, not just the current flow but also the quantum required for meeting climate challenges,” a statement said.

The finance minister urged all G20 members to continue to support multilateral efforts to fight the challenge of global fragmentation.

A G20 expert group on Strengthening Multilateral Development Banks has also been constituted, with Professor Lawrence Summers and former finance commission chair NK Singh as co-conveners.

The group has been tasked with evolving a roadmap for an updated multilateral development banks ecosystem for the 21st century, to help them be better equipped to finance a wide range of Sustainable Development Goals and transboundary challenges such as climate change and health.