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At Their Last Meeting in 2022, G20 Finance Ministers and Central Bank Governors Demonstrates Concrete Actions to Tackle Global Economic Challenges

Joint press release, Washington DC, October 13, 2022

The Fourth Finance Ministers and Central Bank Governor Meeting (FMCBG) was held on 12-13 October 2022, back-to-back with the 2022 Annual Meetings of the International Monetary Fund and the World Bank Group. In their last meeting under the Indonesia G20 Presidency, G20 Ministers and Governors reaffirmed their commitment to solve the heightened global economic challenges and focus on tangible progress. Indonesia G20 Presidency has spared no efforts to preserve the spirit and effectiveness of the G20. At its Finance Track concluding meeting, the presidency has resulted in the concrete deliverables and impactful actions stated in the outcome of the G20 FMCBG.

This October G20 FMCBG meeting was attended in-person by a record number of principals since the pandemic stroke, with 66 principals attending in person, and only 4 principals attending virtually. Overall, the meeting is attended by 371 delegations, of which 304 attended in person and 67 are attended virtually. In addition, the Indonesian G20 Presidency again invited the Finance Minister of Ukraine to this meeting, this is the 3rd invite during the Presidency. G20 Finance Ministers and Central Bank Governors (FMCBG) discussed six agendas, namely : 1) Global Economy; 2) International Financial Architecture; 3) Financial Sector Regulation; 4) Infrastructure Investment; 5) Sustainable Finance; and 6) Sustainable Taxation. In this 4th meeting, Finance Ministers and Central Bank Governors of G20, Minister Sri Mulyani Indrawati, and Governor Perry Warjiyo co-chaired the sessions.

In her opening remarks, Sri Mulyani conveyed that during its presidency, Indonesia has made tireless efforts to facilitate the G20 discussion and expressed high appreciation for strong supports from all members. Sri Mulyani stated that "We must go further – we need to develop concrete actions by demonstrating the spirit of cooperation, collaboration, and consensus. Our shared G20 history shows us we are capable of this." Perry Warjiyo also reiterated the appreciation to the members and stated that "Since the very beginning of our Presidency, the G20 has worked together to advance globally critical issues, providing concrete and collective solutions to secure the recovery."

The global economy is experiencing multifaceted shocks and challenges. Higher-than-expected and persistent inflation, tightening financial conditions, Russia's war against Ukraine, the lingering COVID-19 pandemic, and a supply-demand mismatch has further slowed the global economic outlook. Rising concerns about food and energy prices result in the cost of living pressures in many countries, which further add inflationary pressure. Furthermore, extreme weather events due to climate changes pose downside risks to the global economic outlook, and the increasing energy prices also hamper the path toward a green transition. The long-lasting global challenges have caused increasing debt vulnerabilities and hampered the way toward recovery, which further impacted the vulnerable group, especially low-income and developing countries. In this economic conjuncture, the Finance Ministers and Central Bank Governor have reconvened for the fourth time this year in Washington D.C., to take concrete actions to tackle the global economic challenges.

In line with current global economic challenges, G20 members reaffirm their commitment to well-calibrated, well-planned, and well-communicated policies to support sustainable recovery and to mitigate scarring effects to support strong, sustainable, balanced, and inclusive growth. Along with the increasing challenges, the G20 stressed the importance of maintaining agile and flexible fiscal policy response and temporary and targeted measures while avoiding high inflationary pressures. In this regard, the G20 reaffirmed the importance of the macro-policy cooperation to preserve financial stability and long-term fiscal sustainability and safeguard against downside risks and negative spillovers. The G20 also reiterated the importance of macroprudential policies, progress of Sustainable Development Agendas, and sustainable transitions. To achieve price stability and avoid spillovers, the G20 are also committed to calibrate the pace of monetary policy tightening appropriately.

With regards to the increasing risks of food and energy insecurity, the G20 committed to consider all tools necessary to address food and energy insecurity and cost of living pressures experienced in many countries. The G20 highlighted the importance of cooperation to ensure a coordinated global response to tackle food insecurity. The G20 will further progress with the strategic cooperation in the India G20 Presidency next year.

To support the world in dealing with current and potential future pandemics, the G20 revitalized the global health architecture to increase collective and coordinated action to support pandemic prevention, preparedness, and responses (PPR). This year, the G20 has marked the history by successfully establish the Financial Intermediary Fund (FIF) hosted by the World Bank to ensure the adequacy and sustainability of financing for the prevention and response of future pandemics. FIF's total pledge from founding donors is amounting to USD 1.4 billion, and members encouraged additional pledges voluntarily. The G20 also welcomed PPR FIF's inclusive membership and representation of low- and middle-income countries, civil society organizations, and donors, with WHO holding the central role.

Amidst unprecedented economic and geopolitical challenges, the G20 continues to highlight the importance of strengthening the international financial architecture. On the G20 commitment to enhance long-term global financial resilience, the G20 will continue to monitor the risks of increased capital flows volatility, negative spillovers, and uneven market conditions by welcoming the IMF revised Institutional View (IV) on Liberalization and Capital Flow Management and the BIS Macro-Financial Stability Framework, demanding further progress on the operationalization of the IMF Integrated Policy Framework and maintaining strong global financial safety net (GFSN). G20 continues to support voluntary channelling Special Drawing Right (SDR) allocation to support most vulnerable, and enhancing the resource capacity of the Multilateral Development Banks through the capital adequacy frameworks review, while ensuring the implementation of the Common Framework on Debt Treatment beyond DSSI.

Throughout the pandemic, financial institutions have implemented various extraordinary policies to improve their function as intermediaries to support the economy. While policy support is needed to mitigate the negative impacts of the pandemic, implementing policy support for too long poses a risk to financial stability. As recovery from the pandemic is underway, the G20 look forward for the final report of exit strategies and mitigation of scarring effect in the financial sector, as well as efforts to address vulnerabilities in the Non-Bank Financial Institutions (NBFI). In addition, the G20 continues to strengthen the global financial sector through enhanced risk monitoring and through optimizing the benefit of technology and digitalization. In this context, the G20 welcomed the FSB's assessment on the supervision and regulation of global "stablecoins" arrangement and crypto-assets activities and markets and welcome final guidance by the BIS CPMI and IOSCO which confirms that the Principles for Financial Market Infrastructures apply to systematically important stablecoin arrangements.

The G20 is also committed to continuing exploration on the macro-financial implications of Central Bank Digital Currencies (CBDCs), as these may be designed to facilitate cross-border payments while preserving the stability of the international monetary and financial system. The G20 also welcomed the successful completion of the G20 Techsprint 2022, a joint initiative between the Indonesia G20 Presidency with the BIS Innovation Hub, which has contributed to the debate on the most practical and feasible solutions to implement CBDCs. The G20 have announced the winners for the three categories and rewarded IDR 770,000,000 for each winner at the G20 Techsprint 2022 Award Ceremony and Third CBDC Seminar held virtually back-back-to-back with the 2022 Annual Meetings of the International Monetary Fund and the World Bank Group.

The G20 remains committed to advancing the implementation of the G20 Roadmap on Enhancing Cross-Border Payments (CBP), to achieve faster, cheaper, more transparent and more inclusive cross-border payments as this would deliver widespread benefits for economies worldwide. In this regard, G20 welcome continued exploration of how Central Bank Digital Currencies (CBDCs) could potentially designed to facilitate cross-border payments while preserving the stability and integrity of the international monetary and financial system. In this context, G20 welcome the continued the discussion on interlinking payment systems and on options for access to and interoperability of CBDCs for cross-border payments. As a showcase of a regional implementation of the G20 Roadmap for Enhancing Cross Border Payment Roadmap, ASEAN-5 central banks will sign a General Agreement on Payment Connectivity among ASEAN-5 Central Banks at the side lines of G20 Leaders' Summit in November 2022.

To support a strong and sustainable global economic recovery process, the G20 discussed the development of sustainable, inclusive, accessible, and affordable infrastructure. Members endorsed the voluntary and non-binding G20/Global Infrastructure (GI) Hub Framework on How to Best Leverage Private Sector Participation to Scale Up Sustainable Infrastructure Investment which will consider country circumstances, and which will complement investment from other sources, including public investment and finance provided by MDBs. Furthermore, in supporting inclusive infrastructure the G20 endorsed the G20-OECD Policy Toolkit on Mobilizing Funding and Financing for Inclusive and Quality Infrastructure Investment in Regions and Cities. To support transformative infrastructure, the G20 also endorse the InfraTracker 2.0 and G20 Compendium of Case Studies on Digital Infrastructure Finance Issues, Practices and Innovations. The G20 also encourages quality infrastructure investment by discussing the development of Quality Infrastructure Investment (QII) Indicators. In addition, G20 also discussed the GI Hub future governance.

The G20 emphasized the importance to further progress with the sustainable finance agenda and support the transition to a green economy to achieve net zero emission targets. In this regards, the G20 reiterated its pivotal role in the achievement of the 2030 Agenda for Sustainable Development and the Paris Agreement goals. Progressing from the G20 Roadmap for Sustainable Finance developed in 2021, this year the Indonesian G20 Presidency endorsed the G20 Sustainable Finance Report which articulate the progress on 3 (three) main agendas, namely (i) the development of framework for transition finance, that recognizing climate transition activities, including energy transition, and improving the credibility of financial institutions' commitments, (ii) scaling-up sustainable finance with a focus on improving accessibility and affordability, and (iii) discussing policy levers that incentivize financing and investment that support the transition.

G20 countries endorsed the work carried out by the Presidency and the Global Partnership of Financial Inclusion (GPFI) to harness digitalization to increase financial inclusion, especially for micro, small, medium enterprises and vulnerable groups such as women and youth. On the topic of sustainable finance, G20 countries discussed the implementation of the FSB Roadmap for addressing financial risks from climate change which complements the G20 Sustainable Finance Roadmap, and welcomes the implementation of the roadmap thus far. In addition, the G20 countries encourage initiatives in closing data gaps and welcomed the workplan on the New Data Gap Initiatives to ensure availability of essential data to support data-driven policy making. G20 ask IMF, the FSB and the IAG to begin work on filling these data gaps and and report back on progress in the second half of 2023, noting that the targets are ambitious and delivery will need to take into account national statistical capacities, priorities, and country circumstances as well as avoiding overlap and duplication at international level.

Continuing its commitment to support all vulnerable countries to recover together, recover stronger, the G20 welcomed the voluntary channeling of Special Drawing Rights (SDR) amounting to USD 80.6 billion and welcomed the voluntary contribution to the IMF Resilience and Sustainability Trust (RST). The RST facility is established as an option for members to voluntary reallocate their share of distributed Special Drawing Rights (SDR) to support vulnerable countries in addressing longer-term structural challenges that pose macroeconomic risks, including those stemming from the pandemic and climate change. Furthermore, the G20 has agreed to strengthen the Global Financial Safety Net and call the Multilateral Development Banks (MDBs) to enhance development financing to support economic recovery. In this regard, the G20 welcome early deliberations and urge MDBs to continue to discuss options for implementing the recommendations of the Independent Review on MDBs' Capital Adequacy Frameworks within their own governance frameworks, and look forward to an update in Spring 2023. To address debt vulnerability, especially in low-income countries, the G20 encourages further progress of the implementation of the Common Framework for Debt Treatment beyond the DSSI in a predictable, timely, orderly, and coordinated manner, and welcome progress achieved, including the provision of financing assurance for Zambia and welcome progress made by creditor committees so far and encourage the timely conclusion of the debt treatments for Chad and Ethiopia.

The Presidency thank members for their ongoing commitment to implement the historic agreement on the G20/OECD two-pillar internationaltax package. Members support the ongoing work on Pillar One and welcome the completion of Pillar Two Global Anti-Base Erosion (GloBE) Model Rules, which pave the way for consistent implementation at a global level as a common approach, and look forward to the completion of the GloBE Implementation Framework. Members call on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) to finalize Pillar One, and by signing the Multilateral Convention in the first half of 2023, and to complete the negotiations of the Subject to Tax Rule (STTR) under Pillar Two that would allow the development of a Multilateral Instrument for its implementation. Members also reaffirm the G20 objective to strengthen the tax and development agenda in light of the July 2022 G20 Ministerial Symposium on Tax and Development, and note the G20/OECD Roadmap on Developing Countries and International Tax. Members support the progress made on implementing internationally agreed tax transparency standards, including regional efforts and welcome the signing of the Asia Initiative Bali Declaration.

Indonesia G20 Presidency reiterates that the G20 has proven to be the premier forum for international cooperation that continues to succeed in addressing current and continue its effort to anticipate any further crises. At its last Finance Track meeting in 2022, Indonesia G20 Presidency has maintained the integrity of the G20 by delivering concrete actions to support the global economy to Recover Together, Recover Stronger.

Washington D.C., 13 October 2022

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Source: Bank of Indonesia