India’s G20 presidency has made considerable progress in addressing challenges such as debt vulnerabilities in low and middle-income countries, Union finance minister Nirmala Sitharaman said on Friday. It has enhanced the lending capacity of multilateral development banks (MDBs) and shaped the regulatory framework for cryptocurrencies amid rising challenges in the global economy, she said.
“So far we have ensured that geopolitical differences do not supersede the core G20 mandate of international cooperation,” said Sitharaman, virtually addressing an event of G20 FinanceTrack.
On July 18, the 20-nation block had endorsed a road map for enhanced lending capabilities of MDBs, the need to address debt vulnerabilities and a coordinated risk-based regulatory framework for cryptocurrencies after a two-day meeting of finance ministers and central bank governors of the group.
However, the deliberations could not produce a joint communique, given the differences between the G7 segment and the Russians on how to describe the Ukraine conflict. “The Indian presidency has ensured that common ground is reached on all economic issues, while maintaining a forward-looking agenda for G20 in 2023. Discussions have centered around finding solutions to existing and forestalling emerging problems,” the Sitharaman said.
The minister cautioned that the escalation of debt issues in vulnerable economies poses significant economic risks to the sustainable development. “The Indian G20 presidency has placed great importance on the management of global debt vulnerabilities, demonstrating a commitment to voicing the concerns of global south,” she said. On the issue of debt relief to the most vulnerable countries, which India pressed for as the chair, some headway has been achieved, with China extending its support to the resolution mechanism.
To address urgent global challenges and sustainable development goals, the G20 Independent Expert Group on MDB reforms, co-convened by N K Singh, has estimated an additional spending requirement of $3 trillion per year by 2030. Of the $3 trillion annual need, two-thirds could come from domestic resource mobilisation, while the rest through additional external financing, sources said. Of the $1 trillion in external financing, more than half could come from private financing, and the remaining from official financing, including MDBs.
MDBs are facing increasing demands from donors as well as from borrowing countries to expand their lending operations beyond their core development mandates. However, MDBs are currently not equipped to address this rising demand for their resources adequately, she said.
In the FMCBG meeting, the block also endorsed the financial stability board’s (FSB’s) high-level recommendations for the regulation of crypto assets and global stablecoin arrangements.
“The upcoming synthesis paper developed by the International Monetary Fund and the FSB, coupled with the roadmap will be instrumental in shaping future regulatory measures for crypto assets as we move towards the Leaders Summit in September 2023,” Sitharaman said.