1 Meeting of G20 finance ministers and central bank governors on 14 and 15 April 2016
As usual, the spring meeting of the IMF provided the setting for a meeting of the G20 finance ministers and central bank governors. This year’s meeting took place in Washington, D.C., at the invitation of the Chinese presidency.
One important topic, from Germany’s point of view, was how the international community should respond to the Panama Papers. Together with his counterparts from the UK, France, Spain and Italy (the G5), German Finance Minister Wolfgang Schäuble had presented the G20 with specific proposals for stepping up the fight against tax evasion, tax avoidance and money laundering. The G20 finance ministers and central bank governors agreed to take action in two areas in particular:
First, they called on all relevant countries and jurisdictions to adopt the international standard for the automatic exchange of tax information (also known as the Common Reporting Standard)and, if possible, start exchanging data in 2017. All countries are expected reach a satisfactory level of tax transparency by the time of the G20 summit under Germany’s presidency in 2017. Non-cooperative jurisdictions that have not made any apparent progress can expect the G20 to take defensive measures. The Organisation for Economic Co-operation and Development (OECD) is developing objective criteria for identifying non-cooperative jurisdictions. This work is to be completed by the time the G20 finance ministers and central bank governors meet in July.
Second, the international exchange of beneficial ownership information is to be improved significantly. Leading by example, the G20 states will fully implement the existing standards of the Financial Action Task Force (FATF), especially with regard to the provision and international exchange of beneficial ownership information. The G20 also asked the FATF and the Global Forum on Transparency and Exchange of Information for Tax Purposes to put forward initial proposals on ways to improve the implementation of international transparency standards, particularly those relating to beneficial ownership, in time for the meeting of G20 finance ministers and central bank governors in October.
In their discussions about the state of the global economy, the participants concluded that growth remains modest and that downside risks persist. However, the G20 is in a position to take suitable measures to boost growth should this become necessary. Nevertheless, efforts should be made to avoid overburdening monetary policy and to place the debt-to-GDP ratio on a sustainable path. Against this background, the G20’s commitment to structural reforms aimed at enhancing growth and building confidence is particularly important. Investment also remains at the top of the G20’s agenda, especially in the area of infrastructure. The G20 are committed to working together closely in exchange rate matters and making sure no restrictions are placed on free trade.
Finally, the discussions addressed the international monetary system, including the IMF quota reform and the movement of capital across borders. The participants praised Argentina’s progress in regaining access to international capital markets. They reiterated their continued commitment to financial market reforms and pledged to intensify their efforts to combat the financing of terrorism. In addition, they stated that the area of green finance merits closer analysis. The G20 finance ministers and central bank governors reiterated their call for timely implementation of the Paris Agreement on Climate Change and reaffirmed their commitment to phase out inefficient fossil-fuel subsidies in the medium term.
2 IMF spring meeting and meeting of the International Monetary and Financial Committee on 15 and 16 April 2016
The International Monetary and Financial Committee’s discussions on the state of the global economy largely mirrored those of the G20.
The long-awaited implementation of the quota reform of 2010 has finally become possible following approval by the US Congress. This was welcomed by all sides. It will result in a doubling of the IMF’s own resources. The next quota review is already on the agenda and is to be completed by October 2017. However, the US, which has a blocking minority, has already announced that it will not agree to any further quota increases any time soon. As a result, it is unrealistic to expect the review to lead to anything more than small, targeted increases in the voting shares of individual underrepresented developing and emerging economies.
All in all, the IMF is now on very solid footing and has sufficient own resources, allowing it to fulfil its central role in providing a strong global financial safety net. The global financial safety net has been expanded and strengthened considerably since the financial crisis. It has coped with past challenges admirably well without even having to utilise all the financial resources available. The IMF will continue to play a key role in coordinating existing elements of the global financial safety net. If necessary, it will support further improvements to the coordination of individual elements.
At the meeting, Germany pointed out that governments and parliaments are responsible for strengthening the resilience of their national economies and should see this as a valuable contribution to the stability of the international monetary system. This includes reducing unsustainable budget and current account deficits and implementing structural reforms, particularly those aimed at enhancing competitiveness and legal certainty.
The World Bank Group meetings were held concurrently. World Bank President Jim Yong Kim pointed out that demand for World Bank loans and services was at a record high. He stated that the World Bank is willing to make a key contribution to solving problems that are increasingly acquiring a global dimension.
3 Upcoming meetings
The next meeting of G20 finance ministers and central bank governors will take place in Chengdu, China, on 23 and 24 July 2016. The next annual meeting of the IMF and the World Bank will be held in Washington, D.C., on 7-9 October 2016.
This article first appeared in German in the May 2016 edition of the Ministry’s monthly report.