project report on mis

8/7/2019 Project report on MIS

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Definitions of G-20

y The Group of Twenty Finance Ministers and Central Bank Governors (known as the G-20 and also the G20 or Group of Twenty) is a group of finance ministers and central bank governors from 20 economies: 19 countries plus the European Union. ..

y G 20 - Coalition of countries (currently 21) pressing for ambitious reforms of agriculturein developed countries with some flexibility for developing countries: Argentina, Bolivia,Brazil, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria,Pakistan, Paraguay, Philippines, South ...

y G20 - Coalition of 21 developing countries pushing for a reduction of trade-distortingfarm subsidies and for greater access to industrialized country markets. ...

y G20 - A group of agricultural exporting developing countries that joined together onAugust 20, 2003 in the Cancún Ministerial of the WTO's Doha Round in order to

negotiate collectively with the US and EU, especially seeking the elimination of developed country agricultural subsidies. ...

y G20 - A group composed of the finance ministers and central bankers of the following 20countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India,Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea,Turkey, the United Kingdom, the United States, and ...



What is the G-20

The Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in1999 to bring together systemically important industrialized and developing economies todiscuss key issues in the global economy. The inaugural meeting of the G-20 took place in

Berlin, on December 15-16, 1999, hosted by German and Canadian finance ministers.

Mandate

The G-20 is the premier forum for our international economic development that promotes openand constructive discussion between industrial and emerging-market countries on key issuesrelated to global economic stability. By contributing to the strengthening of the internationalfinancial architecture and providing opportunities for dialogue on national policies, internationalco-operation, and international financial institutions, the G-20 helps to support growth anddevelopment across the globe

Origins

The G-20 was created as a response both to the financial crises of the late 1990s and to agrowing recognition that key emerging-market countries were not adequately included in thecore of global economic discussion and governance. Prior to the G-20 creation, similar groupingsto promote dialogue and analysis had been established at the initiative of the G-7. The G-22 metat Washington D.C. in April and October 1998. Its aim was to involve non-G-7 countries in theresolution of global aspects of the financial crisis then affecting emerging-market countries. Twosubsequent meetings comprising a larger group of participants (G-33) held in March and April1999 discussed reforms of the global economy and the international financial system. The proposals made by the G-22 and the G-33 to reduce the world economy's susceptibility to crises

showed the potential benefits of a regular international consultative forum embracing theemerging-market countries. Such a regular dialogue with a constant set of partners wasinstitutionalized by the creation of the G-20 in 1999.

Membership

The G-20 is made up of the finance ministers and central bank governors of 19 countries:

y Argentinay Australiay Brazily Canaday Chinay Francey Germanyy Indiay Indonesiay Italy



y Japany Mexicoy Russiay Saudi Arabiay South Africay

Republic of Koreay Turkeyy United Kingdomy United States of America

R egio

n Member Leader Finance Minister

Central

Bank

Governor

GDP

(nominal·PPP)$Million USD

GD

P

per

capita

$US

D

Populati

on

Africa

Sout

h Africa

President

JacobZuma

Minister of

Finance

PravinGordhan

GillMarcus

287,219

492,684

5,700

49,320,500

NorthAmer

ica

Canada

PrimeMinister

StephenHarper

Minister of Finance

JimFlaherty

Mark Carney

1,336,427

1,281,064

39,600

34,088,000

Mexi

co

President

FelipeCalder

ón

Secretaryof

Finance

ErnestoCorderoArroyo

AgustínCarstens

874,903

1,465,726

9,100

111,211,789

Unit

ed States

Preside

nt

Barack

Obama

Secretary

of theTreasury

Timothy

Geithner

Ben

Bernank e

14,256

,275

14,256

,275

46,4

00

309,173,

000

SouthAmer

ica

Arge

ntina Preside

nt

Cristina

Fernández de

Minister of

Econom

AmadoBoudou

Mercedes Marcódel Pont

310,065

584,392

7,500

40,134,425



Kirchner

y

Brazil

President

Luiz

InácioLula daSilva

Minister of

Finance

GuidoMantega

Henriqu

eMeirelle

s

1,574,039

2,013,186

8,000

193,088,765

EastAsia

Chin

a

President

HuJintao

Minister of

Finance

XieXuren

ZhouXiaochu

an

4,908,982

8,765,240

3,700

1,338,612,968

Japan

Prime

Minister

NaotoKan

Minister

of Finance

Yoshihik o Noda

Masaaki

Shirakawa

5,068,059 4,159,432 39,800 127,390,000

Sout

h Korea

President

LeeMyung

-bak

Minister of

Strategyand

Finance

YoonJeung-hyun

KimChoong-

soo

832,512

1,364,148

17,100

48,875,000

SouthAsia

Indi

a

PrimeMiniste

r

ManmohanSingh

Minister of

Finance

PranabMukherj

ee

DuvvuriSubbara

o

1,310,171

3,526,124

1,000

1,180,251,000

SoutheastAsia

Indo

nesia

President

SusiloBamba

ngYudhoyono

Minister of

Finance

AgusMartowa

rdojo

Darmin Nasution

539,337

962,471

2,200

231,369,500

Western

Asia

Saud

i Arabia King

Abdullah

Minister of

Finance

IbrahimAbdulazi

z Al-Assaf

Muhammed Al-Jasser

369,671

593,385

14,400

25,721,000



Eurasia

R uss

ia

President

DmitryMedve

dev

Minister of

Finance

AlexeiLeonido

vichKudrin

SergeyMikhayl

ovichIgnatyev

1,229,227

2,109,551

8,800

141,927,297

Tur

key

PrimeMiniste

r

RecepTayyipErdoa

n

Minister of

Finance

Mehmetimek

DurmuYlmaz

615,329

880,061

7,900

72,561,312

Europe

European

Union

E.CouncilPreside

nt

[9]

Commission

President[9]

Herman Van

Rompu

y

JoséManuelBarros

o

Commissioner for

Economic

andMonetar y Affairs

OlliRehn

Jean-ClaudeTrichet

16,447,259

14,793,979

32,900

501,259,840

France President

Nicolas

Sarkozy

Minister of the

Econom

y,Industryand

Employment

ChristineLagarde

Christian Noyer 2,675,951 2,108,228 41,600 65,447,374

Ger

many

Chancellor

AngelaMerkel

Minister of

Finance

Wolfgang

Schäuble

Axel A.Weber

3,352,742

2,806,226

40,800

81,757,600

Italy

Prime

Minister

Silvio

Berlusconi

Minister of

Econom

yand

Finance

Giulio

Tremonti

Mario

Draghi

2,118,

264

1,740,

123

36,4

00

60,325,8

05

Unit

ed

Kingdo

m

PrimeMiniste

r

DavidCamer

on

Chancellor of theExchequ

er

GeorgeOsborne

MervynKing

2,183,607

2,139,400

35,000

62,041,708



Oceania

Aust

ralia

PrimeMiniste

r

JuliaGillard

Treasurer

WayneSwan

GlennStevens

997,201

851,170

46,300

22,328,632

The European Union, who is represented by the rotating Council presidency and the EuropeanCentral Bank, is the 20th member of the G-20. To ensure global economic fora and institutionswork together, the Managing Director of the International Monetary Fund (IMF) and thePresident of the World Bank, plus the chairs of the International Monetary and FinancialCommittee and Development Committee of the IMF and World Bank, also participate in G-20meetings on an ex-officio basis. The G-20 thus brings together important industrial and

emerging-market countries from all regions of the world. Together, member countries representaround 90 per cent of global gross national product, 80 per cent of world trade (including EUintra-trade) as well as two-thirds of the world's population. The G-20's economic weight and broad membership gives it a high degree of legitimacy and influence over the management of theglobal economy and financial system.

Achievements

The G-20 has progressed a range of issues since 1999, including agreement about policies for growth, reducing abuse of the financial system, dealing with financial crises and combatingterrorist financing. The G-20 also aims to foster the adoption of internationally recognized

standards through the example set by its members in areas such as the transparency of fiscal policy and combating money laundering and the financing of terrorism. In 2004, G-20 countriescommitted to new higher standards of transparency and exchange of information on tax matters.This aims to combat abuses of the financial system and illicit activities including tax evasion.The G-20 has also aimed to develop a common view among members on issues related to further development of the global economic and financial system.

To tackle the financial and economic crisis that spread across the globe in 2008, the G-20members were called upon to further strengthen international cooperation. Since then, theconcerted and decisive actions of the G-20 helped the world deal effectively with the currentfinancial and economic crisis. The G-20 has already delivered a number of significant and

concrete outcomes. For examples, it committed to implement the unprecedented and mostcoordinated expansionary macroeconomic policies, including the fiscal expansion of US$5trillion and the unconventional monetary policy instruments; significantly enhance the financialregulations, notably by the establishment of the Financial Stability Board(FSB); and substantiallystrengthen the International Financial Institutions(IFIs), including the expansion of resources andthe improvement of precautionary lending facilities of the IFIs.



Reflecting on these achievements and recognizing that more needs to be done to ensure a strong,sustained and balanced global recovery, the G-20 Leaders at Pittsburgh Summit designated theG-20 as the premier forum for international economic cooperation.

Chair

Unlike international institutions such as the Organization for Economic Co-operation andDevelopment (OECD), IMF or World Bank, the G-20 (like the G-7) has no permanent staff of itsown. The G-20 chair rotates between members, and is selected from a different regionalgrouping of countries each year. In 2010 the G-20 chair is the Republic of Korea, and in 2011 itwill be France. The chair is part of a revolving three-member management Troika of past, present and future chairs. The incumbent chair establishes a temporary secretariat for theduration of its term, which coordinates the group's work and organizes its meetings. The role of the Troika is to ensure continuity in the G-20's work and management across host years.

Former G-20 Chairs

y 1999-2001 Canaday 2002 Indiay 2003 Mexicoy 2004 Germanyy 2005 Chinay 2006 Australiay 2007 South Africay 2008 Brazily 2009 United Kingdom

Meetings and activities

It is normal practice for the G-20 finance ministers and central bank governors to meet once ayear. The last meeting of ministers and governors was held in St. Andrews, UK on 6-7 November 2009. The ministers' and governors' meeting is usually preceded by two deputies'meetings and extensive technical work. This technical work takes the form of workshops, reportsand case studies on specific subjects, that aim to provide ministers and governors withcontemporary analysis and insights, to better inform their consideration of policy challenges andoptions.



2010 G20 Events

Deputies Meeting, February 27-28, Korea. (Incheon Songdo)

Meeting of Finance Ministers and Central Bank Governors, April 23, USA. (Washington, D.C)

Meeting of Finance Ministers and Central Bank Governors, June 4-5, Korea. (Busan)

G20 Summit Meeting, June 26-27, Canada. (Toronto)

Deputies Meeting, September 4-5, Korea. (Gwangju)

Deputies Meeting, October 7, USA. (Washington, D.C)

Meeting of Finance Ministers and Central Bank Governors, October 22-23, Korea. (Gyeongju)

G20 Summit Meeting, November 11-12, Korea (Seoul)

Interaction with other international organizations

The G-20 cooperates closely with various other major international organizations and fora, as the potential to develop common positions on complex issues among G-20 members can add political momentum to decision-making in other bodies. The participation of the President of theWorld Bank, the Managing Director of the IMF and the chairs of the International Monetary andFinancial Committee and the Development Committee in the G-20 meetings ensures that the G-20 process is well integrated with the activities of the Bretton Woods Institutions. The G-20 alsoworks with, and encourages, other international groups and organizations, such as the Financial

Stability Board and the Basel Committee on Banking Supervision, in progressing internationaland domestic economic policy reforms. In addition, experts from private-sector institutions andnon-government organisations are invited to G-20 meetings on an ad hoc basis in order to exploitsynergies in analyzing selected topics and avoid overlap.

External communication

The country currently chairing the G-20 posts details of the group's meetings and work programon a dedicated website. Although participation in the meetings is reserved for members, the public is informed about what was discussed and agreed immediately after the meeting of ministers and governors has ended. After each meeting of ministers and governors, the G-20

publishes a communiqué which records the agreements reached and measures outlined. Materialon the forward work program is also made public.



G-20: India to seek greater role in managing

global economy

PITTSBURGH: As the leaders of the world's 20 largest economies gather here Thursday toreview their efforts to stem global recession, India is expected to pitch for a more proactive rolein the management of the global economy.

As Prime Minister Manmohan Singh who arrives here put it before embarking for the summit,"It is necessary for India to engage in the management of the world economy because we have alot at stake, and a lot to contribute." He will also "convey India's interest in seeing the earliest possible return to trend growth and stabilisation of the banking and financial sectors in the

advanced economies, because this directly affects our exports, capital inflows and investment."

Having weathered the global meltdown much better than others, a confident India is alsoexpected to seek reform of international financial bodies and forcefully oppose all forms of protectionism that may affect global economic recovery.

As Manmohan Singh has said India "would also like to see a strong message to emerge fromPittsburgh against protectionism in all its forms, whether trade in goods, services, investment or financial flows."

Planning Commission Deputy Chairman Montek Singh Ahluwalia will be the prime minister's'sherpa' or key aide at the two-day summit hosted by US President Barack Obama.

Ahead of the Pittsburgh Summit bringing together a group of countries that accounts for 90 percent of the global output, 80 percent of world trade and two-thirds of humanity, India has alsocommitted to invest up to $10 billion in the IMF to help replenish the fund to help countriesstruggling in the current financial crisis.

Meeting amid signs of a fading recession, the G-20 leaders are expected to echo their financeministers and central bank governors who said earlier this month that while it was important tostart discussing exit strategies, it was too early to begin carrying them out.

Officials representing the G-20 members have also said it's unlikely the nations' leaders willmake additional financial commitments on the scale of those made in April, when the G-20leaders agreed to triple the resources of the IMF, which acts as the world's lender of last resort.

The G-20 members are working on a more detailed framework for regulatory reform along withfirm deadlines. Ultimately, though, it is up to national legislatures to follow through. USCongress is working on a proposal to overhaul financial regulation.



Besides India and the US, the G20 comprises Argentina, Australia, Brazil, Canada, China,France, Germany, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, SouthKorea, Turkey, Britain and the EU

G20 SUMMIT

India At G20 Shows Changing Global Economy Acknowledging that the global economic slowdown willadversely affect India, Prime Minister Manmohan Singhtoday said he would press for a bigger role for developing countries in the international financialmanagement at the G-20 Summit in the US on Saturday.As he left for Washington, Singh said the "protectionisttendencies" of the developed world needed to end andthe international financial bodies like the InternationalMonetary Fund (IMF) and the World Bank strengthenedto ensure that the fallout of the global crisis on

developing nations is "minimal".

Contending that India, as a major developing economy, has a vital stake in the stability of theinternational economic and financial system, Singh said he expected the meeting of the importantworld leaders to come up with corrective measures in the wake of the recent crisis. "Therefore,our message to the G-20 will be that they must do everything in their power (to ensure) that the process of development, particularly with regard to the implementation of MDGs by thedeveloping countries, is not adversely affected by the global economic crisis.

"I will put forward our views on the need for greater inclusivity in the international financialsystem, the need to ensure that the growth prospects of the developing countries do not suffer,and the need to avoid protectionist tendencies," he said in his departure statement.

White House Hopes G-20 Will Arrive At Agreement Reaffirming its commitment to market principles and

liberalisation, the US today said that it expects a

"thorough" discussion on the financial crisis and hoped

world leaders will arrive at an agreement on reforms to

stabilise the global markets when they meet in

Washington this weekend. "This will be the first step

that the G-20 has met at leader level. We expect a

thorough discussion, of causes, of actions, near-term

actions to be taken, longer-term actions to be

considered, and, importantly, agreement on fundamental principles for reform. "So I would say

we are expecting an important and vigorous discussion with some quite concrete results," Special

Assistant to US President for International Economic Affairs Dan Price told reporters.

"This is the first in a series and there will be further meetings, not only to review the decisions



that may be taken at this meeting, but also to follow up and receive recommendations on areas

where further work has been tasked," Price said.

The meeting of the G20 countries which include US, UK, China, Japan, Australia and India was

called by US President George W Bush to discuss issues concerning the global financial crisis

which has resulted in failure of many financial entities across US and Europe and has sent the

global capital markets tumbling.

G20 remains vague on social impact

The G20 communiqué agreed at end September in Pittsburgh, despite expressing concern aboutthe impacts of the financial crisis on developing countries, remained vague on some points, and

still failed to address the needed radical overhaul of the international financial architecture.

G20 leaders made an excellent diagnosis. They "note with concern the adverse impact of theglobal crisis on low income countries' capacity to protect critical core spending in areas such ashealth, education, safety nets, and infrastructure." They correctly recognised that "we share acollective responsibility to mitigate the social impact of the crisis and to assure that all parts of the globe participate in the recovery." And they said that "as we increase the flow of capital todeveloping countries, we also need to prevent its illicit outflow."

But the cures for these ills fell far short of what is needed, with one or two specificcommitments, plus some broad brush promises. While, the statement gives further details on the

purposes and financial instruments that will deliver planned funding via the IMF and WorldBank, it fails to make specific commitments on additional financial support for low-incomecountries. Martin Khor of the Geneva-based intergovernmental body of developing countriesSouth Centre commented that the G20 "did not tackle key issues of immediate concern todeveloping countries, such as providing more liquid funds, or to help countries from falling intoa foreign debt crisis caused by the financial downturn."

The most concrete pledge was on agriculture. The G20 decided that the World Bank shouldwork with others to develop a new trust fund to "help support innovative efforts to improveglobal nutrition and build sustainable agricultural systems". Anticipating recipient countryconcern about a new sector specific funding vehicle, the communiqué continues that this facility

"should be designed to ensure country ownership and rapid disbursement of funds, fullyrespecting the aid effectiveness principles agreed in Accra." It should also "facilitate the participation of private foundations, businesses, and NGOs, [and] should complement the UNComprehensive Framework for Agriculture." G20 sadly leaders did not take up Eurodad's proposal that anyone proposing a new vertical fund should propose abolishing two existing onesin the interests of non-proliferation.

Failing to deal with the financial sector



Ultimately one of the core problems causing the financial crisis was poor regulation of banks andother financial institutions. The G20 committed to "make sure our regulatory system for banksand other financial firms reins in the excesses that led to the crisis. Where reckless behavior anda lack of responsibility led to crisis, we will not allow a return to banking as usual." Such warmwords were accompanied by a list of areas for work such as competition policy, capital

standards, and derivatives, with concrete dates set out for some of the refrom. However, the G20clearly does not envision a radical restructuring of finance, for example by only "improv[ing] theover-the-counter derivatives market" rather than abolishing it altogether in favour of exchange-trading for all derivative contracts. Nothing was said about actually reducing the size of banksthat are "too large to fail" instead of just creating plans for their failure. On securitisation, whilethe "sponsors or originators should retain a part of the risk of the underlying assets", thissuggestion was not agreedas a firm global rule that will need to be adopted across all locations, bringing the spectre of reguabout whether suggestions that financial firms issuing securitisedfinancial instruments should hold onto ory arbitrage.

The one glimmer of hope was a request from the G20 that the IMF investigate "how the financial

sector could make a fair and substantial contribution toward paying for any burdens associatedwith government interventions to repair the banking system." This is a coded reference to the proposed financial transaction tax which has been supported by the heads of state of France andGermany. The French foreign minister wrote are article saying that such a tax should also beused for development purposes.

On illicit capital outflows the G20 "will work with the World Bank's Stolen Assets Recovery program to secure the return of stolen assets to developing countries, and support other efforts tostem illicit outflows. We ask the Financial Action Task Force to help detect and deter the proceeds of corruption by prioritizing work to strengthen standards on customer due diligence, beneficial ownership and transparency."

Whilst the mention of the Bank's StAR programme is welcome, NGOs are concerned that this programme is founded on a narrow and limited approach to illicit capital outflows. According toestimates from the Washington-based Global Financial Integrity, outflows from corruption are aslittle as 5 per cent, and just over one third are proceeds from criminal activities. The lion's shareof capital outflows is linked to tax evasion and avoidance by commercial activities. Thecommuniqué fails to put forward specific and ambitious measures to combat tax evasion andavoidance, to enhance transparency of the activities of multinational corporations and to lay-outan ambitious plan to close down tax havens. Civil society groups were especially interested innew global rules on tax information exchange that would help developing countries. This G20meeting in London instead endorsed the OECD's insufficient and flawed approach, while thePittsburgh meeting made no further progress.

Some new reports are also called for in the statement, most importantly one on looking into "howthe financial sector could make a fair and substantial contribution toward paying for any burdensassociated with government interventions to repair the banking system." This is a reference to the proposal of the French and German leaders for a financial transaction tax. The IMF is to preparethe report by the spring 2010 IFI meetings. NGOs in Europe welcomed this developed. Thecommuniqué also references again a Charter of Sustainable Economic Activity, though there is



no timetable for its completion. The G20 did support "Core Values for Sustainable EconomicActivity, which will include those of propriety, integrity, and transparency".

Dealing with jobs and unemployment

The G20 leaders, helpfully, also said they welcomed the recently adopted International Labour Organisation (ILO) resolution Recovering from the Crisis: A Global Jobs Pact and "commit our nations to adopt key elements of its general framework to advance the social dimension of globalisation." They said that "international institutions should consider ILO standards and thegoals of the jobs pact in their crisis and post-crisis analysis and policy-making activities".

Although the recognition of ILO's role in ensuring that economic recovery is based on creatingdecent jobs, forthcoming research from Solidar and Eurodad on how the IMF emergency loansimpact the decent work agenda shows that there are still striking contradictions on the mandatesthat these two agencies have been given by the G20. This research finds that the macroeconomicframeworks set by the IMF in its emergency loans still constrain government's ability to pursue

the types of policies that would ensure creation of decent jobs for all. In some countries that took IMF loans a key part of the Fund programme is a retrenchment of public sector jobs.

Boosting the IFIs

The rest of the G20 package was an update on previous announcements or warm words about the possibility that some countries might take action in small groups. "On voluntary basis" is usedtwice and "ministers will explore" another two times. G20 voluntary commitments included"funding programmes such as the Scaling Up Renewable Energy Program and the Energy for thePoor Initiative, and to increasing and more closely harmonising our bilateral efforts."

Another voluntary area was on the use of the more than $280 billion worth of special drawingrights (SDRs), the IMF-created reserve asset, that were distributed in early September. More than$180 billion worth of these went to rich countries and NGOs had demanded that they be re-transferred so that they would benefit those that needed them. These ideas were shot down by theIMF in September, so the G20 wants now to look at "mechanisms that could allow themobilisation of existing [SDR] resources to support the IMF's lending to the poorest countries."That would transform conditionality-free SDRs into conditionality-laden loans from the IMF(see Upd ate 67 ).

What about social protection?

The communiqué mentions that the World Bank should strengthen: "its focus on food securitythrough enhancements in agricultural productivity and access to technology, and improvingaccess to food;" and "its focus on human development and security in the poorest and mostchallenging environments;" by contributing "to financing the transition to a green economythrough investment in clean energy, energy efficiency and climate resilience."



However, civil society organisations in the South and the North are deeply concerned about theincreasing role given to the World Bank as provider of global public goods, such as finance for climate change and food security. An analysis of the 2008 W orl d Develo pment Re port byGerman NGOs shows that the Bank still encourages small farmers to become part of the globalvalue chain of agricultural production in order to graduate from poverty. This is the very

approach that promoted agricultural sector privatisation and liberalisation in the 1990s and thatturned 70 per cent of the developing countries into net food importers, thus making themextremely vulnerable to the vagaries of the international commodities markets. It is thus veryunclear that the Bank is well placed to promote the types of agricultural models that will enhancedeveloping countries' food sovereignty and food security for the world's poor. Likewise, theBank continues to fund fossil fuel projects which seriously calls into question the ability of theBank to take up a role at all in climate change funding.

The communique also calls on the Bank to provide "support for private-sector led growth andinfrastructure to enhance opportunities for the poorest, social and economic inclusion, andeconomic growth." It also called for the phasing out of all fossil fuel subsidies, a measure which

will be supported by environmental advocates. However, past attempts to do this, for examplethe IMF conditions in Indonesia in 1998, have generated widespread public anger. Much of the problem will be implementation of promised "targeted support for the poorest".

The leaders in Pittsburgh also gave some work to their underlings, without any specific timelinesor objectives. They asked "relevant ministers to explore ... the benefits of a new crisis supportfacility in IDA to protect low-income countries from future crises." This comes on top of theBank's unsuccessful efforts to boost IDA resources through so-called frontloading. Under theG20 London communiqué, low-income countries were to be allowed to draw down their IDAresources early, but this would have left a gap in their budgets in a few years time without somemore resources.

Also to be explored is "the enhanced use of financial instruments in protecting the investment plans of middle income countries from interruption in times of crisis, including greater use of guarantees." This is a reference to a potential increase in the World Bank's treasury operationsthat give developing countries tools to hedge risks by using financial markets. Some have also posited that the World Bank should directly guarantee sovereign debt on its own balance sheet,an idea which will be resisted by some rich countries as too risky for the Bank.

IFI governance changes lack ambition

In a move that has generated significant media coverage, the G20 made a commitment "to a shift

in International Monetary Fund quota share to dynamic emerging markets and developingcountries of at least 5 per cent from over-represented countries to under-represented countries."The details of how to accomplish this shift are to be worked out in time for the deadline set at the previous G20 meeting of January 2011. The communiqué did commit the Fund to "using thecurrent quota formula as the basis to work from", but this ignores that the current formula design,if implemented in full, would actually shift votes away from developing countries and towardsrich countries. The G20 commitment leaves vague whether there will be some fiddling with theformula and implementing the quota shift to avoid supposedly 'underrepresented' countries such



as Luxembourg, Spain, Japan, the United Kingdom, and the United States increasing their votingweights.

Though the IMF already had a shift of a few percentage points in voting rights in 2008 and isnow promising another 5 per cent, at the World Bank there will be "an increase of at least 3 per

cent of voting power for developing and transition countries." This wholly unimpressive targethas been lambasted by some NGOs, who have been supporting the idea that as an institution thatis about development cooperation and partnership, borrowing countries should have at least half the voting rights. NGO Oxfam International has highlighted that the Bank's goals on governancereform also continue to classify some high-income countries under the category 'developing andtransition countries' for the purpose of discussing voting rights.

R eforming the international governance architecture

The other exciting development was the now much discussed decision of the G20 to appointitself the guardian of the world economy. The communiqué proclaimed: "We designated the G20

to be the premier forum for our international economic cooperation", essentially giving the G7/8a further shove out of the economic policy making sphere. Pundits theorised that the G8 wouldturn into an extra-UN forum for discussing security and geopolitical strategy while economicissues will be handled with the emerging markets at the table at the G20.

This is of course an improvement over when the G7 made economic policy. However the power of the so called G1, the United States, still exerts a strong influence over the G20 agenda. TheG20 has committed to two meetings next year at the leaders level, one in Canada in June next tothe scheduled G8 meeting, and one in Korea in November. Canada is the 2010 G8 chair, whereasKorea is the G20 chair for the year. The communiqué then envisages that the G20 will becomeannual affairs starting in 2011 with a meeting France.

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