Mangala sits as vice-chair of G-24 meeting, several proposals made

Ministers of the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development held their ninety-eighth meeting in Washington D.C. yesterday (Thursday) with Abraham Tekeste, Minister of Finance and Economic Cooperation of Ethiopia in the Chair; Mangala Samaraweera, Minister of Finance of Sri Lanka, serving as First Vice-Chair; and Julio Velarde, Governor of the Central Bank of Peru as Second Vice-Chair.

At the meeting, the Group of Twenty-Four welcomed the increasing momentum in global growth, trade and investment. The G-24 members noted that emerging market and developing economies (EMDEs) will continue to account for the bulk of global growth.

“Commodity prices are stabilizing, providing commodity exporters the opportunity to continue undertaking reforms, rebuild buffers, further diversify their economies and stimulate growth. We remain concerned about the medium-term downside risks, which include a potential increase in protectionism, sudden tightening of global financial conditions, roll back of regulatory reforms, and geopolitical risks. International cooperation and policy coordination in key areas are essential to minimize adverse spillovers on growth and financial markets. Multilateral commitment is necessary to maintain an open, rules-based trading system,” they said.

They also noted that the IMF is central to the Global Financial Safety Net and encouraged greater cooperation between the IMF and the Regional Financial Arrangements.

“We welcome the ongoing review of the IMF’s toolkit, including possible new instruments, to meet adequately the liquidity and precautionary needs of its member countries and look forward to its early conclusion. We call for evenhanded surveillance and lending decisions, and for the extension of the mandate of the IMF’s Evenhandedness Committee to include the Fund’s lending activities. More work is needed to address and minimize the stigma attached to IMF’s facilities. We support further work to broaden the role and use of the Special Drawing Rights (SDR) as a reserve currency,” the G-24 members said.

In the 2018 review of the IMF’s Facilities for Low-Income Countries (LICs), G-24 supports a more comprehensive engagement with LICs. This includes substantially expanding the resources of the Poverty Reduction and Growth Trust (PRGT), increasing access commensurate with countries’ needs, and introducing a precautionary instrument for LICs.

G-24 welcomed the IMF’s review of country experiences in addressing systemic risks arising from volatile capital flows and called for a fair assessment of the intent, content and design of macro-prudential and capital flow management measures available to and used by countries to deal with capital flow volatility.

“We call for all countries to implement the Intended Nationally Determined Contributions under the Paris Climate Agreement, reflecting the principle of common but differentiated responsibilities, in light of country-specific circumstances and in the context of poverty reduction and sustainable development. Extreme weather events have substantial adverse human and economic consequences in developing countries, in particular LICs and small island states, which have contributed very little to climate change. We call for a strong global response to the recent devastating hurricanes that hit the Caribbean. We call for supporting the efforts of developing countries to cope with and build resilience to climate-related natural disasters. We look forward to developed countries delivering on their commitment to provide US$100 billion per year new and additional financial resources by 2020 to support developing countries’ climate actions. We urge them to authorize the use of reflows to enhance financing from the Clean Technology Funds,” G-24 said.

G-24 called  for continued support from International Financial Institutions (IFIs) and the international community to developing countries that are disproportionately affected by the refugee crisis, including internally displaced populations, and encourage the continued pursuit of developmental approaches to address this serious challenge.

“We call on IFIs to monitor and address the macroeconomic and development consequences of tightening migration regulations in some countries. We call on IFIs to strengthen their support for conflict affected, fragile, and small states, including deploying innovative financial instruments and partnerships. While we welcome global efforts against money laundering and financing of terrorism, we call for more concrete global actions to address the decline of correspondent banking relationships in some countries. We call for stronger multilateral cooperation to effectively combat illicit financial flows,” G-24 said.

G-24 also urged the IMF and the World Bank Group (WBG) to continue strengthening their assistance in improving domestic resource mobilization and enhancing its contribution to inclusive growth through progressive tax policies, as well as more efficient and better targeted public spending. (Colombo Gazette)