G20 meeting: Global recovery only 'moderate, weaker than desirable'
Cape Town – At the recent G20 meeting of global finance ministries in Baden-Baden in Germany, South Africa’s Finance Minister Pravin Gordhan called on attendees to address tax administrative challenges in extractive industries, as well as wasteful tax incentives.
In a statement issued by National Treasury on Monday, following a two-day meeting of finance ministers and central bank governors, Gordhan welcomed the progress globally with international tax matters, such as measures to address Base Erosion and Profit Shifting (BEPS).
BEPS has become an important topic worldwide, as governments, which have become increasingly short of tax revenue are looking at ways to plug leakages. In South Africa, exchange controls has helped prevent base erosion and profit shifting to low tax jurisdictions through regulations and restrictions.
Gordhan and South African Reserve Bank (SARB) Governor Lesetja Kganyago represented South Africa at the first G20 gathering of finance ministers and central bank governors during which the global economic outlook, framework for a strong, sustainable and balanced growth, the G20 compact with Africa, international financial architecture, financial sector development and regulation, international tax and other global governance topics were discussed.
The attendees all agreed that global economic recovery is moderate and continues to be weaker than desirable amid political uncertainty, said National Treasury in a statement on Monday.
“Ministers and governors reaffirmed their previous exchange rate commitments,” National Treasury said, “including that they will refrain from competitive devaluation (when the abrupt national currency devaluation by one nation is matched by a currency devaluation of another).”
At the meeting, ministers and central bank governors also reaffirmed the leverage of all monetary, fiscal and structural tools to achieving strong, sustainable, balanced and inclusive growth.
At the recent World Economic Forum (WEF2017) held in Davos, Switzerland in January, the matter of expanding social participation in the economy and how to achieve inclusive growth were some of the most frequently discussed topics.
“Ministers and governors agreed to work to strengthen the contribution of trade to economies as well as to strive to reduce excessive global imbalances, promote greater inclusiveness and fairness and reduce inequality in pursuit of economic growth,” National Treasury said. .
A key deliverable for the Germany G20 Presidency is broadening international economic and financial cooperation with African countries to foster sustainable and inclusive growth in line with the African Union’s (AU) Agenda 2063.
The G20 Compact with Africa for Resilience and Growth (CwA) – a framework for regional economic and financial stability in Africa – received substantial backing from G20 ministers and governors.
African ministers from, Cote d’Ivoire, Morocco, Rwanda, Senegal and Tunisia which had previously signalled interest in the CwA were invited to the G20 where they presented on their countries’ macro-economic environment, reform initiatives and investment projects.
According to National Treasury representatives at the gathering supported among other matters:
- the strengthening of the international financial architecture through further work on global financial safety net with a strong, quota-based and adequately resourced International Monetary Fund (IMF) at its centre;
- operational guidelines for sustainable financing reflecting responsibilities of borrowers and lenders; and
- principles for effective coordination between the IMF and multilateral development banks (MDBs) in the case of where countries are seeking financing for macroeconomic vulnerabilities.
In line with the G20’s resilience work, a select number of non-OECD G20 members declared their intention to join the OECD (Organisation for Economic Co-operation and Development) Code of Liberalisation of Capital Movements.
The code, which is currently being reviewed, is a framework for countries to remove unnecessary barriers to the movement of capital, while providing flexibility to cope with situations of economic and financial instability.
In addition, the delegation agreed to finalise the Basel III framework without further increasing the capital requirements across the banking sector.
G20 Finance ministers and central bank governors will next meet at the Spring Meetings of the World Bank and IMF in April 2017 in Washington, DC.Read Fin24's top stories trending on Twitter: Fin24’s top stories