Summary
The Group of Twenty (G20) is an informal forum in which the world’s major economies discuss global financial and development issues. The G20 is made up of 19 countries, the European Union and since 2023, the African Union. The 19 countries are Argentina, Australia, Brazil, Canada, China, Germany, France, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States. Since December 1st 2023, Brazil holds the Presidency of the G20, which is annually rotated amongst its members. South Africa will assume the presidency on 1 December 2024.
The G20 communiqué was issued after the Group’s October 23-24 gathering at the IMF and World Bank Annual Meetings, which took place at the 25th anniversary of the group’s Finance Track. The meeting focused on the Brazilian Presidency’s three priorities: social inclusion and the fight against hunger and poverty; energy transitions and sustainable development; and reform of global governance institutions.
Despite noting the soft landing from the recent inflation crisis and the better-than-expected resilience of the global economy, the document highlights the divergent paths of high income countries and Emerging Market and Developing Economies (EMDEs), including their capacity to respond to the climate emergency. The 13-page communiqué reflects the Brazilian presidency’s focus on structural issues of concern to the Global South, including fighting inequality and addressing climate change, increasing sustainable development finance, developing better and bigger multilateral development banks (MDBs), improving the global financial safety net and addressing debt issues, strengthening financial stability and ‘financial inclusion’, and deepening international tax cooperation. The document concludes with three paragraphs on the importance of widening participation in G20 processes – a Brazilian priority – and stressing the importance of the Finance Track’s role as a venue for cooperation and dialogue in difficult geopolitical times.
Underscoring the general sense of unease during the Annual Meetings – and in line with the IMF’s World Economic Outlook report’s analysis that, “downside risks are rising and now dominate the outlook: [including] a possible resurgence of financial market volatility with adverse effects on sovereign debt markets (see October 2024 Global Financial Stability Report), a deeper growth slowdown in China, and the continued ratcheting up of protectionist policies” – the communiqué details persistent challenges to the attainment of the Sustainable Development Goals (SDGs), including: “Poverty; hunger; malnutrition and diseases; inequality within and across countries; demographic transition; insufficient access to technologies and quality education; wars and escalating conflicts; energy and food insecurity; significant financing gaps to cover social spending and investment; elevated debt burdens; subdued long-term capital flows to Emerging Markets and Developing Economies (EMDEs); low productivity growth; significant loss of biodiversity; and climate change.” In a poorly veiled reference to the prospect of the second Trump presidency in the United States, the document stresses a commitment “to resist protectionism and…support a rules-based, non-discriminatory, fair, open, inclusive, equitable, sustainable, and transparent multilateral trading system.”
The communiqué’s focus on fighting inequality with a reference to the G20 Note on a Menu of Policy Measures and Recommendations to Address Inequality Pressures and emphasis on Strong, Sustainable Balanced and Inclusive Growth (SSBIG) are significant positive steps and reflect an increasing acceptance between the Global North and South of the negative economic and political consequences of increasing inequality.
The discussion on climate change, which is coupled with the fight against inequality, while making references to its importance and unequal impact, is deeply caveated by statements about the benefits of voluntary technology transfers and a focus on domestic resource mobilisation rather than linking the topic to issues of continued debt distress or calls, by the UN, among others, for a new allocation of Special Drawing Rights. The communiqué stresses that the Group looks forward to monitoring the effective implementation of the recommendation from the independent review of the vertical climate and environmental funds, prepared by the Independent High-Level Expert Group (iHLEG) “to be conducted over the next G20 presidencies” and will continue to accelerate the implementation of the G20 Sustainable Finance Roadmap. The section on sustainable finance also includes a significant focus on infrastructure finance, including references to foreign exchange risks (see Observer Autumn 2024).
The document devotes five paragraphs to MDB reform, focusing squarely on broader systemic reforms and endorsing the G20 MDB Roadmap towards Better, Bigger, and More Effective MDBs as a key deliverable of the Brazilian G20 Presidency. Ahead of the 2025 shareholding review of the International Bank for Reconstruction and Development, the World Bank’s middle-income arm, the document expresses the Group’s commitment to exploring “general principles for reviews of the alignment of MDBs resources and strategies” noting these should guide “when additional capital may be needed….” Relating to resources, the communiqué emphasises its support to ongoing Capital Adequacy Efforts and calls for increased grant financing and a “robust and impactful IDA 21 replenishment, including an expansion of its donor country base.”
Turning its attention to the global safety net and debt issues, the document focuses on the domestic approval of the IMF’s 16th General Review of Quotas (GRQ) and New Arrangements to Borrow, by mid-November, reiterating, “the urgency and importance of realignment in quota shares…” The document welcomes efforts to develop approaches to guide further quota realignment, including through a new quota formula, under the 17th GRQ by June 2025. It notes the review of its surcharges policy, which the communiqué stresses will alleviate the borrowing costs for programme countries, “while preserving their intended incentives and safeguarding the Fund’s financial soundness.” The document likewise welcomes the review of the Poverty Reduction and Growth Trust (PRGT) and encourages members to fully implement outstanding pledges to it and the Resilience and Sustainability Trust (RST). Countries were also encouraged to rechannel their Special Drawing Rights, including through MDBs.
Disregarding robust evidence of the failure of the Common Framework to address debt issues, the communiqué reaffirms the Group’s “commitment to act swiftly to address global debt vulnerabilities” while studiously avoiding any references to calls for an independent debt workout mechanism, debt forgiveness or a new allocation of Special Drawing Rights.
Reflecting evolving dynamics in the international payment systems, cryptocurrencies, money laundering and tax evasion, the document dedicates seven paragraphs to financial stability and ‘inclusion’ issues.
Noting the “landmark” Rio de Janeiro Declaration on International Tax Cooperation endorsed on 25 July 2024, and reflecting the progress made by the Brazilian presidency on one of its key priority areas – tax cooperation and the taxation of ultra-high-net-worth individuals, the document stresses the imperative role of progressive taxation and domestic resource mobilisation and encourages “constructive discussions at the United Nations on the development of a Framework Convention on International Taxation Cooperation and its protocols.”
The 25th anniversary of the Finance Track comes after three consecutive presidencies by countries from the Global South: Indonesia, India and Brazil – with a forth, South African presidency to follow in 2025, before the United States assumes the role in 2026. While undoubtedly not by design, the communiqué’s focus on the challenges above, and tepid language on all issues, perhaps bar the taxation of the ultra-high-net-worth individuals, in many ways reflects the Group’s inability to addresses long-standing fundamental structural challenges faced by the global economy resulting from deep power imbalances in the international financial architecture, including within the Group. While stressing the ‘voluntary’ nature of each commitment made and reiterated by the membership, the communiqué is littered with references to G20 documents, task forces and initiatives, underlying the Group’s normative power, despite its ‘informal’ arrangement.
