G20’s finance track agenda: Leveraging capital for MDBs, crypto norms, climate transition to be key talking points

The G20 nations are expected to discuss a joint ‘synthesis paper’ by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) which has now been submitted and is being discussed at the meeting of finance deputies in New Delhi on September 5-6 ahead of the Leaders’ Summit. The G20 summit will focus on a comprehensive roadmap and “building blocks” for common norms to regulate crypto. “The roadmap and building blocks have almost been arrived at. Of course, this is subject to the leaders agreeing to it,” the source said.

The G20 nations are also expected to discuss a plan to build capacity for the proposed two-pillar framework for levying tax on revenues of multinational firms and a report on facilitating the use of information sharing agreements and tax treaties for non-tax purposes.

Volatility of food and energy prices emanating from Russia’s invasion of Ukraine in February last year have been a “big issue” in G20 discussions during India’s G20 presidency, sources said. A report providing an overview of the macroeconomic stability cost of the food and energy insecurity, ‘Macroeconomic Impacts of Food and Energy Insecurity and their Implications for the Global Economy’, was submitted during the meeting of finance ministers and central bank governors in Gandhinagar in July and Russia’s opposition to the report was noted in a footnote to the Chair’s Summary. The issue will be taken up in the Leaders’ Summit.

“Given the fact that Russia is not comfortable even with the mention of the issue in a footnote, the Indian Presidency would consider including the aforementioned language in the main text of any proposed joint statement at the Summit and let the leaders take the final call,” the source said.

On the issue of the push for enhanced capital requirements for MDBs, sources said some countries expressed apprehension whether they will be required to pay more. However, India along with support from the US has assuaged those concerns and pushed for greater leveraging of capital of the MDBs to make these institutions ready for new-age challenges and goals of climate change and digital public infrastructure.

The report of the G20 Independent Expert Group on Strengthening Multilateral Development Banks in its first volume had recommended that the MDBs adopt a triple mandate to address eliminating extreme poverty, inclusive growth and the financing of global public goods along with a suggestion to constitute a ‘Global Challenges Funding’ mechanism for ‘Global Public Goods’. The second volume of the report will be taken up for discussion at the World Bank and IMF annual meetings in Marrakech in October.

Climate transition is also expected to be a key focus area of discussion in the upcoming summit as G20 members have discussed carbon pricing and non-pricing tools. “The report on this issue has focused on the global policy transition path that recognises countries to choose among a range of policy options. For instance, various energy baskets would be provided as options for each country to choose. There will be a transition window with customised solutions for climate transition for each country,” the source said.