JOINT PRESS RELEASE
No.24/61/DKom
SP-16/KLI/2022
Jakarta, 18th February 2022 – Today, Friday (18/02), the series of side events for the Finance and Central Bank Deputies Meeting and Finance Ministers and Central Bank Governors Meeting has come to an end. The Finance Ministers and Central Bank Governors have adopted the communique, as a joint statement of G20 members containing joint commitments and joint statements to be conveyed to the public regarding the latest global issues that have become a common concern and are the result of a consensus among G20 members, including the ongoing yet asynchronous global economic recovery, weakened by the emergence of new Covid-19 variants. Capacity to overcome the Covid-19 pandemic, including vaccine availability in several jurisdictions, is a key determinant of the divergent recovery. Such factors will undoubtedly shape the global economic landscape moving forward.
After contracting 3.3 percent in 2020, the IMF projects that the global economy will grow 5.9 percent in 2021 before slow down to 4.4 percent in 2022. Other factors contributing to the slowing down include rising food and energy prices, potential interest rate hikes, supply chain disruptions, climate change disasters, and rising geopolitical tensions.
To continue economic growth in the long run, overcoming the pandemic is the main prerequisite. This issue is a significant challenge in poor and developing countries with limited funding capacity to deal with the pandemic. G20 Finance Ministers and Central Bank Governors are committed to ensuring access to safe, timely, equitable, and affordable vaccines, especially for low and middle-income countries, enhancing global dialogue and cooperation on issues related to pandemic prevention, preparedness, and response (PPR), and contribute to the strengthening of the global health architecture.
In addition, the formation of a Joint Finance and Health Task Force (JFHTF) consisting of the Ministry of Finance and the Ministry of Health of G20 members together with WHO and the World Bank, is expected to be able to further identify and coordinate collective action, especially in the context of mobilizing global financing for PPR.
Since the pandemic happened, the G20 has provided support for emerging countries through the debt suspension as well as external debt restructuring by G20 members to poor and developing countries to increase capacity in handling the pandemic as well as in increasing debt management capacity so that it can support economic recovery in the long run. To support this initiative, international financial institutions facilitate through trust funds to help poor and developing countries. G20 will continue to strive for concrete and transparent achievements in terms of encouraging the settlement of the poor and developing countries' debt through the adoption of a Common Framework.
Regarding international taxes, the Ministers of Finance and Central Bank Governors of G20 members also ensured the rapid global implementation of the two-pillar international tax package of the G20/OECD agreed in 2021, agreed to develop multilateral models and instruments to ensure it will enter into force at the global level in 2023. G20 supports the progress made in the G20/OECD Inclusive Framework on Base Erosion Profit Shifting/BEPS (transparency and equitable allocation of taxation rights) and calls for finalization and consistent implementation at the global level. The discussion also covered global and regional efforts, including the Asia-Pacific region, to increase domestic resource mobilization in developing countries through technical assistance and capacity building.
The COVID-19 pandemic has disrupted government and private sector investment into infrastructure. For this reason, the Ministers of Finance and Central Bank Governors were committed to pursuing the revitalization of infrastructure investment in a sustainable, inclusive, accessible, and affordable way, primarily through increased involvement of the private sector to support public investment and international financial institutions. This is in line with the G20 Roadmap to Infrastructure. The mobilization of infrastructure investment is also carried out to increase social inclusion and overcome disparities between regions. G20 will bring back efforts to improve digital infrastructure and InfraTech investment to narrow the digital divide.
The Ministers of Finance and Central Bank Governors also discussed sustainable economic and financial policies. They addressed the challenges of climate change, which are essential factors to support economic growth. In strengthening global efforts to achieve the goals of the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement and implementing the commitments of the UN Climate Change Conference of the Parties (COP26), the policy mix towards carbon neutrality and net-zero emissions. the policy mix includes joint efforts and collaborations, including carbon pricing mechanisms and incentives, while providing targeted support to the poorest and most vulnerable countries, considering the national circumstances. The G20 Finance Track dialogue on the macroeconomic and fiscal impacts of climate change policies can be used to discuss related technical issues.
The Ministers of Finance and Central Bank Governors reaffirmed the commitments of developed countries to immediately mobilize joint climate finance of USD 100 billion per year by 2020 and annually until 2025 to meet the needs of developing countries, in the context of meaningful mitigation actions and transparency in the implementation.
Furthermore, to support macroeconomic and financial system stability, G20 is committed to implementing well-calibrated, well-planned, and well-communicated policies to normalize the pandemic-related policies and overcome the long-term impact of the pandemic (scarring effect), according to the conditions of each country. This needs to be done to anticipate the impact of propagation and long-term effects of the differences in the pace of economic recovery and the capacity to handle the pandemic, which varies in each country.
Amid current global uncertainty and the need to increase economic resilience, G20 reaffirms its commitment to strengthening long-term financial stability. By doing so, the G20 discussed efforts to increase sustainable foreign capital flows and encouraged a review of the International Monetary Fund's institutional views on liberalization, and the management of short-term capital flows to mitigate the risks. In line with this, the COVID-19 pandemic has also impacted the disruption of international trade and financing supply chains. To overcome this, the G20 Presidency of Indonesia will discuss the use of multi-currency in trade and balanced financing, while considering their benefits and costs. In addition, the G20 is also committed to strengthening the Global Financial Safety Net to assist countries in dealing with global economic turmoil.
Furthermore, the G20 discussed efforts to strengthen the global financial sector and overcome the impact of the pandemic on the financial sector. This is necessary so that financial institutions can carry out their intermediary function to support the economy. Another concern to G20 members is managing risks and optimizing benefits with the increasingly widespread use of technology and digitalization in the financial sector. Regarding technology risk management and digitalization, the G20 members agreed on the need for a regulatory framework and supervision of crypto assets. The rapid development of crypto-assets has to be monitored properly or it can cause instability to the economy.
The G20 also emphasized the importance of assessing the implications of Central Bank Digital Currency (CBDC) on the international monetary and financial system. From technology and digitization optimization perceptive, the G20 will continue the implementation of the G20 Roadmap for Enhancing Cross-Border Payments to encourage fast, easy, economical, convenient, and reliable payment systems, as well as to discuss the use of digitalization to increase financial inclusion, especially for vulnerable groups such as women, youth and SMEs.
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