Project Report on MIS

The Role of G-20 in India

SUBMITTED TO SUBMITTED BY
NEERU Mam AVINASH CHAUDHARY
ROLLNO: 5004
MBA 3RD SEM

Definitions of G-20
 The Group of Twenty Finance Ministers and Central Bank Governors (known as the G-
20 and also the G20 or Group of Twenty) is a group of finance ministers and central bank
governors from 20 economies: 19 countries plus the European Union. ..

 G 20 - Coalition of countries (currently 21) pressing for ambitious reforms of agriculture

in developed countries with some flexibility for developing countries: Argentina, Bolivia,
Brazil, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria,
Pakistan, Paraguay, Philippines, South ...

 G20 - Coalition of 21 developing countries pushing for a reduction of trade-distorting

farm subsidies and for greater access to industrialized country markets. ...

 G20 - A group of agricultural exporting developing countries that joined together on

August 20, 2003 in the Cancún Ministerial of the WTO's Doha Round in order to
negotiate collectively with the US and EU, especially seeking the elimination of
developed country agricultural subsidies. ...

 G20 - A group composed of the finance ministers and central bankers of the following 20
countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India,
Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea,
Turkey, the United Kingdom, the United States, and ...
What is the G-20
The Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in
1999 to bring together systemically important industrialized and developing economies to
discuss key issues in the global economy. The inaugural meeting of the G-20 took place in
Berlin, on December 15-16, 1999, hosted by German and Canadian finance ministers.

Mandate

The G-20 is the premier forum for our international economic development that promotes open
and constructive discussion between industrial and emerging-market countries on key issues
related to global economic stability. By contributing to the strengthening of the international
financial architecture and providing opportunities for dialogue on national policies, international
co-operation, and international financial institutions, the G-20 helps to support growth and
development across the globe

Origins

The G-20 was created as a response both to the financial crises of the late 1990s and to a
growing recognition that key emerging-market countries were not adequately included in the
core of global economic discussion and governance. Prior to the G-20 creation, similar groupings
to promote dialogue and analysis had been established at the initiative of the G-7. The G-22 met
at Washington D.C. in April and October 1998. Its aim was to involve non-G-7 countries in the
resolution of global aspects of the financial crisis then affecting emerging-market countries. Two
subsequent meetings comprising a larger group of participants (G-33) held in March and April
1999 discussed reforms of the global economy and the international financial system. The
proposals made by the G-22 and the G-33 to reduce the world economy's susceptibility to crises
showed the potential benefits of a regular international consultative forum embracing the
emerging-market countries. Such a regular dialogue with a constant set of partners was
institutionalized by the creation of the G-20 in 1999.

Membership

The G-20 is made up of the finance ministers and central bank governors of 19 countries:

 Argentina
 Australia
 Brazil
 Canada
 China
 France
 Germany
 India
 Indonesia
 Italy
  Japan
 Mexico
 Russia
 Saudi Arabia
 South Africa
 Republic of Korea
 Turkey
 United Kingdom
 United States of America

GD
P
Central
GDP per
Regio Bank Populati
Member Leader Finance Minister (nominal·PPP) capi
n Govern on
$Million USD ta
or
$US
D

Minister
Afric  Sout Preside Jacob Pravin Gill 287,21 492,68 5,70 49,320,5
of
a h Africa nt Zuma Gordhan Marcus 9 4 0 00
Finance

Prime Stephe Minister

 Cana Jim Mark 1,336, 1,281, 39,6 34,088,0
Ministe n of
da Flaherty Carney 427 064 00 00
r Harper Finance

North Felipe Secretary Ernesto

 Mexi Preside Agustín 874,90 1,465, 9,10 111,211,
Amer Calder of Cordero
co nt Carstens 3 726 0 789
ica ón Finance Arroyo

Secretary Ben
 Unit Preside Barack Timothy 14,256 14,256 46,4 309,173,
of the Bernank
ed States nt Obama Geithner ,275 ,275 00 000
Treasury e

South  Arge Preside Cristin Minister Amado Mercede 310,06 584,39 7,50 40,134,4
Amer ntina nt a of Boudou s Marcó 5 2 0 25
Fernán Econom
 dez de
Kirchn y del Pont
er

ica
Luiz Henriqu
Minister
 Braz Preside Inácio Guido e 1,574, 2,013, 8,00 193,088,
of
il nt Lula da Mantega Meirelle 039 186 0 765
Finance
Silva s

Minister Zhou
 Chin Preside Hu Xie 4,908, 8,765, 3,70 1,338,61
of Xiaochu
a nt Jintao Xuren 982 240 0 2,968
Finance an

Prime Minister Masaaki

 Japa Naoto Yoshihik 5,068, 4,159, 39,8 127,390,
Ministe of Shiraka
East n Kan o Noda 059 432 00 000
r Finance wa
Asia

Minister
Lee of Yoon Kim
 Sout Preside 832,51 1,364, 17,1 48,875,0
Myung Strategy Jeung- Choong-
h Korea nt 2 148 00 00
-bak and hyun soo
Finance

Prime Manm Minister Pranab Duvvuri

South 1,310, 3,526, 1,00 1,180,25
 India Ministe ohan of Mukherj Subbara
Asia 171 124 0 1,000
r Singh Finance ee o

Susilo
South Bamba Minister Agus
 Indo Preside Darmin 539,33 962,47 2,20 231,369,
east ng of Martowa
nesia nt Nasution 7 1 0 500
Asia Yudho Finance rdojo
yono

Weste  Saud King Abdull Minister Ibrahim Muham 369,67 593,38 14,4 25,721,0
rn i Arabia ah of Abdulazi med Al- 1 5 00 00
Asia Finance z Al- Jasser
 Assaf

Alexei Sergey
Dmitry Minister
 Russ Preside Leonido Mikhayl 1,229, 2,109, 8,80 141,927,
Medve of
ia nt vich ovich 227 551 0 297
dev Finance
Kudrin Ignatyev
Euras
ia
Recep
Prime Minister
 Turk Tayyip Mehmet Durmuş 615,32 880,06 7,90 72,561,3
Ministe of
ey Erdoğa Şimşek Yılmaz 9 1 0 12
r Finance
n

Europ E. Herma
e Council n Van
Commiss
Preside Rompu
ioner for
nt[9] y
 Euro Economi Jean-
Olli 16,447 14,793 32,9 501,259,
pean c Claude
Rehn ,259 ,979 00 840
Union and Trichet
José
Monetar
Commi Manuel
y Affairs
ssion Barros
Preside o
nt[9]
Minister
of the
Econom
Nicolas
 Fran Preside y, Christine Christia 2,675, 2,108, 41,6 65,447,3
Sarkoz
ce nt Industry Lagarde n Noyer 951 228 00 74
y
and
Employ
ment
Minister Wolfgan
 Ger Chancel Angela Axel A. 3,352, 2,806, 40,8 81,757,6
of g
many lor Merkel Weber 742 226 00 00
Finance Schäuble
 Italy Prime Silvio Minister Giulio Mario 2,118, 1,740, 36,4 60,325,8
Ministe Berlusc of Tremonti Draghi 264 123 00 05
r oni Econom
y
and
Finance
  Unit Chancell
Prime David
ed or of the George Mervyn 2,183, 2,139, 35,0 62,041,7
Ministe Camer
Kingdo Exchequ Osborne King 607 400 00 08
r on
m er
Prime
Ocea  Aust Julia Treasure Wayne Glenn 997,20 851,17 46,3 22,328,6
Ministe
nia ralia Gillard r Swan Stevens 1 0 00 32
r

The European Union, who is represented by the rotating Council presidency and the European
Central Bank, is the 20th member of the G-20. To ensure global economic fora and institutions
work together, the Managing Director of the International Monetary Fund (IMF) and the
President of the World Bank, plus the chairs of the International Monetary and Financial
Committee and Development Committee of the IMF and World Bank, also participate in G-20
meetings on an ex-officio basis. The G-20 thus brings together important industrial and
emerging-market countries from all regions of the world. Together, member countries represent
around 90 per cent of global gross national product, 80 per cent of world trade (including EU
intra-trade) as well as two-thirds of the world's population. The G-20's economic weight and
broad membership gives it a high degree of legitimacy and influence over the management of the
global economy and financial system.

Achievements

The G-20 has progressed a range of issues since 1999, including agreement about policies for
growth, reducing abuse of the financial system, dealing with financial crises and combating
terrorist financing. The G-20 also aims to foster the adoption of internationally recognized
standards through the example set by its members in areas such as the transparency of fiscal
policy and combating money laundering and the financing of terrorism. In 2004, G-20 countries
committed to new higher standards of transparency and exchange of information on tax matters.
This aims to combat abuses of the financial system and illicit activities including tax evasion.
The G-20 has also aimed to develop a common view among members on issues related to further
development of the global economic and financial system. 

To tackle the financial and economic crisis that spread across the globe in 2008, the G-20
members were called upon to further strengthen international cooperation. Since then, the
concerted and decisive actions of the G-20 helped the world deal effectively with the current
financial and economic crisis. The G-20 has already delivered a number of significant and
concrete outcomes. For examples, it committed to implement the unprecedented and most
coordinated expansionary macroeconomic policies, including the fiscal expansion of US$5
trillion and the unconventional monetary policy instruments; significantly enhance the financial
regulations, notably by the establishment of the Financial Stability Board(FSB); and substantially
strengthen the International Financial Institutions(IFIs), including the expansion of resources and
the improvement of precautionary lending facilities of the IFIs.

Reflecting on these achievements and recognizing that more needs to be done to ensure a strong,
sustained and balanced global recovery, the G-20 Leaders at Pittsburgh Summit designated the
G-20 as the premier forum for international economic cooperation.

Chair

Unlike international institutions such as the Organization for Economic Co-operation and
Development (OECD), IMF or World Bank, the G-20 (like the G-7) has no permanent staff of its
own. The G-20 chair rotates between members, and is selected from a different regional
grouping of countries each year. In 2010 the G-20 chair is the Republic of Korea, and in 2011 it
will be France.  The chair is part of a revolving three-member management Troika of past,
present and future chairs. The incumbent chair establishes a temporary secretariat for the
duration of its term, which coordinates the group's work and organizes its meetings. The role of
the Troika is to ensure continuity in the G-20's work and management across host years.

Former G-20 Chairs

 1999-2001 Canada
 2002 India
 2003 Mexico
 2004 Germany
 2005 China
 2006 Australia
 2007 South Africa
 2008 Brazil
 2009 United Kingdom

Meetings and activities

It is normal practice for the G-20 finance ministers and central bank governors to meet once a
year. The last meeting of ministers and governors was held in St. Andrews, UK on 6-7
November 2009.  The ministers' and governors' meeting is usually preceded by two deputies'
meetings and extensive technical work. This technical work takes the form of workshops, reports
and case studies on specific subjects, that aim to provide ministers and governors with
contemporary analysis and insights, to better inform their consideration of policy challenges and
options.
 

2010 G20 Events

Deputies Meeting, February 27-28, Korea. (Incheon Songdo)

Meeting of Finance Ministers and Central Bank Governors, April 23, USA. (Washington, D.C)

Meeting of Finance Ministers and Central Bank Governors, June 4-5, Korea. (Busan)

G20 Summit Meeting, June 26-27, Canada. (Toronto)

Deputies Meeting, September 4-5, Korea. (Gwangju)

Deputies Meeting, October 7, USA. (Washington, D.C)

Meeting of Finance Ministers and Central Bank Governors, October 22-23, Korea. (Gyeongju)

G20 Summit Meeting, November 11-12, Korea (Seoul)

Interaction with other international organizations

The G-20 cooperates closely with various other major international organizations and fora, as the
potential to develop common positions on complex issues among G-20 members can add
political momentum to decision-making in other bodies. The participation of the President of the
World Bank, the Managing Director of the IMF and the chairs of the International Monetary and
Financial Committee and the Development Committee in the G-20 meetings ensures that the G-
20 process is well integrated with the activities of the Bretton Woods Institutions. The G-20 also
works with, and encourages, other international groups and organizations, such as the Financial
Stability Board and the Basel Committee on Banking Supervision, in progressing international
and domestic economic policy reforms. In addition, experts from private-sector institutions and
non-government organisations are invited to G-20 meetings on an ad hoc basis in order to exploit
synergies in analyzing selected topics and avoid overlap.

External communication

The country currently chairing the G-20 posts details of the group's meetings and work program
on a dedicated website. Although participation in the meetings is reserved for members, the
public is informed about what was discussed and agreed immediately after the meeting of
ministers and governors has ended. After each meeting of ministers and governors, the G-20
publishes a communiqué which records the agreements reached and measures outlined. Material
on the forward work program is also made public.
G-20: India to seek greater role in managing
global economy

PITTSBURGH: As the leaders of the world's 20 largest economies gather here Thursday to
review their efforts to stem global recession, India is expected to pitch for a more proactive role
in the management of the global economy.

As Prime Minister Manmohan Singh who arrives here put it before embarking for the summit,
"It is necessary for India to engage in the management of the world economy because we have a
lot at stake, and a lot to contribute." He will also "convey India's interest in seeing the earliest
possible return to trend growth and stabilisation of the banking and financial sectors in the
advanced economies, because this directly affects our exports, capital inflows and investment."

Having weathered the global meltdown much better than others, a confident India is also
expected to seek reform of international financial bodies and forcefully oppose all forms of
protectionism that may affect global economic recovery.

As Manmohan Singh has said India "would also like to see a strong message to emerge from
Pittsburgh against protectionism in all its forms, whether trade in goods, services, investment or
financial flows."

Planning Commission Deputy Chairman Montek Singh Ahluwalia will be the prime minister's
'sherpa' or key aide at the two-day summit hosted by US President Barack Obama.

Ahead of the Pittsburgh Summit bringing together a group of countries that accounts for 90
percent of the global output, 80 percent of world trade and two-thirds of humanity, India has also
committed to invest up to $10 billion in the IMF to help replenish the fund to help countries
struggling in the current financial crisis.

Meeting amid signs of a fading recession, the G-20 leaders are expected to echo their finance
ministers and central bank governors who said earlier this month that while it was important to
start discussing exit strategies, it was too early to begin carrying them out.

Officials representing the G-20 members have also said it's unlikely the nations' leaders will
make additional financial commitments on the scale of those made in April, when the G-20
leaders agreed to triple the resources of the IMF, which acts as the world's lender of last resort.

The G-20 members are working on a more detailed framework for regulatory reform along with
firm deadlines. Ultimately, though, it is up to national legislatures to follow through. US
Congress is working on a proposal to overhaul financial regulation.
Besides India and the US, the G20 comprises Argentina, Australia, Brazil, Canada, China,
France, Germany, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South
Korea, Turkey, Britain and the EU

G20 SUMMIT
India At G20 Shows Changing Global Economy
Acknowledging that the global economic slowdown will
adversely affect India, Prime Minister Manmohan Singh
today said he would press for a bigger role for
developing countries in the international financial
management at the G-20 Summit in the US on Saturday.
As he left for Washington, Singh said the "protectionist
tendencies" of the developed world needed to end and
the international financial bodies like the International
Monetary Fund (IMF) and the World Bank strengthened
to ensure that the fallout of the global crisis on
developing nations is "minimal".

Contending that India, as a major developing economy, has a vital stake in the stability of the
international economic and financial system, Singh said he expected the meeting of the important
world leaders to come up with corrective measures in the wake of the recent crisis. "Therefore,
our message to the G-20 will be that they must do everything in their power (to ensure) that the
process of development, particularly with regard to the implementation of MDGs by the
developing countries, is not adversely affected by the global economic crisis.

"I will put forward our views on the need for greater inclusivity in the international financial
system, the need to ensure that the growth prospects of the developing countries do not suffer,
and the need to avoid protectionist tendencies," he said in his departure statement.

White House Hopes G-20 Will Arrive At Agreement

Reaffirming its commitment to market principles and
liberalisation, the US today said that it expects a
"thorough" discussion on the financial crisis and hoped
world leaders will arrive at an agreement on reforms to
stabilise the global markets when they meet in
Washington this weekend. "This will be the first step
that the G-20 has met at leader level. We expect a
thorough discussion, of causes, of actions, near-term
actions to be taken, longer-term actions to be considered, and, importantly, agreement on
fundamental principles for reform. "So I would say we are expecting an important and vigorous
discussion with some quite concrete results," Special Assistant to US President for International
Economic Affairs Dan Price told reporters.
"This is the first in a series and there will be further meetings, not only to review the decisions
that may be taken at this meeting, but also to follow up and receive recommendations on areas
where further work has been tasked," Price said.

The meeting of the G20 countries which include US, UK, China, Japan, Australia and India was
called by US President George W Bush to discuss issues concerning the global financial crisis
which has resulted in failure of many financial entities across US and Europe and has sent the
global capital markets tumbling.

G20 remains vague on social impact

The G20 communiqué agreed at end September in Pittsburgh, despite expressing concern about
the impacts of the financial crisis on developing countries, remained vague on some points, and
still failed to address the needed radical overhaul of the international financial architecture.

G20 leaders made an excellent diagnosis. They "note with concern the adverse impact of the
global crisis on low income countries' capacity to protect critical core spending in areas such as
health, education, safety nets, and infrastructure." They correctly recognised that "we share a
collective responsibility to mitigate the social impact of the crisis and to assure that all parts of
the globe participate in the recovery." And they said that "as we increase the flow of capital to
developing countries, we also need to prevent its illicit outflow."

But the cures for these ills fell far short of what is needed, with one or two specific
commitments, plus some broad brush promises. While, the statement gives further details on the
purposes and financial instruments that will deliver planned funding via the IMF and World
Bank, it fails to make specific commitments on additional financial support for low-income
countries. Martin Khor of the Geneva-based intergovernmental body of developing countries
South Centre commented that the G20 "did not tackle key issues of immediate concern to
developing countries, such as providing more liquid funds, or to help countries from falling into
a foreign debt crisis caused by the financial downturn."

The most concrete pledge was on agriculture. The G20 decided that the World Bank should
work with others to develop a new trust fund to "help support innovative efforts to improve
global nutrition and build sustainable agricultural systems". Anticipating recipient country
concern about a new sector specific funding vehicle, the communiqué continues that this facility
"should be designed to ensure country ownership and rapid disbursement of funds, fully
respecting the aid effectiveness principles agreed in Accra." It should also "facilitate the
participation of private foundations, businesses, and NGOs, [and] should complement the UN
Comprehensive Framework for Agriculture." G20 sadly leaders did not take up Eurodad's
proposal that anyone proposing a new vertical fund should propose abolishing two existing ones
in the interests of non-proliferation.
Failing to deal with the financial sector
Ultimately one of the core problems causing the financial crisis was poor regulation of banks and
other financial institutions. The G20 committed to "make sure our regulatory system for banks
and other financial firms reins in the excesses that led to the crisis. Where reckless behavior and
a lack of responsibility led to crisis, we will not allow a return to banking as usual." Such warm
words were accompanied by a list of areas for work such as competition policy, capital
standards, and derivatives, with concrete dates set out for some of the refrom. However, the G20
clearly does not envision a radical restructuring of finance, for example by only "improv[ing] the
over-the-counter derivatives market" rather than abolishing it altogether in favour of exchange-
trading for all derivative contracts. Nothing was said about actually reducing the size of banks
that are "too large to fail" instead of just creating plans for their failure. On securitisation, while
the "sponsors or originators should retain a part of the risk of the underlying assets", this
suggestion was not agreedas a firm global rule that will need to be adopted across all locations,
bringing the spectre of reguabout whether suggestions that financial firms issuing securitised
financial instruments should hold onto ory arbitrage.

The one glimmer of hope was a request from the G20 that the IMF investigate "how the financial
sector could make a fair and substantial contribution toward paying for any burdens associated
with government interventions to repair the banking system." This is a coded reference to the
proposed financial transaction tax which has been supported by the heads of state of France and
Germany. The French foreign minister wrote are article saying that such a tax should also be
used for development purposes.

On illicit capital outflows the G20 "will work with the World Bank's Stolen Assets Recovery
program to secure the return of stolen assets to developing countries, and support other efforts to
stem illicit outflows. We ask the Financial Action Task Force to help detect and deter the
proceeds of corruption by prioritizing work to strengthen standards on customer due diligence,
beneficial ownership and transparency."

Whilst the mention of the Bank's StAR programme is welcome, NGOs are concerned that this
programme is founded on a narrow and limited approach to illicit capital outflows. According to
estimates from the Washington-based Global Financial Integrity, outflows from corruption are as
little as 5 per cent, and just over one third are proceeds from criminal activities. The lion's share
of capital outflows is linked to tax evasion and avoidance by commercial activities. The
communiqué fails to put forward specific and ambitious measures to combat tax evasion and
avoidance, to enhance transparency of the activities of multinational corporations and to lay-out
an ambitious plan to close down tax havens. Civil society groups were especially interested in
new global rules on tax information exchange that would help developing countries. This G20
meeting in London instead endorsed the OECD's insufficient and flawed approach, while the
Pittsburgh meeting made no further progress.

Some new reports are also called for in the statement, most importantly one on looking into "how
the financial sector could make a fair and substantial contribution toward paying for any burdens
associated with government interventions to repair the banking system." This is a reference to the
proposal of the French and German leaders for a financial transaction tax. The IMF is to prepare
the report by the spring 2010 IFI meetings. NGOs in Europe welcomed this developed. The
communiqué also references again a Charter of Sustainable Economic Activity, though there is
no timetable for its completion. The G20 did support "Core Values for Sustainable Economic
Activity, which will include those of propriety, integrity, and transparency".

Dealing with jobs and unemployment

The G20 leaders, helpfully, also said they welcomed the recently adopted International Labour
Organisation (ILO) resolution Recovering from the Crisis: A Global Jobs Pact and "commit our
nations to adopt key elements of its general framework to advance the social dimension of
globalisation." They said that "international institutions should consider ILO standards and the
goals of the jobs pact in their crisis and post-crisis analysis and policy-making activities".

Although the recognition of ILO's role in ensuring that economic recovery is based on creating
decent jobs, forthcoming research from Solidar and Eurodad on how the IMF emergency loans
impact the decent work agenda shows that there are still striking contradictions on the mandates
that these two agencies have been given by the G20. This research finds that the macroeconomic
frameworks set by the IMF in its emergency loans still constrain government's ability to pursue
the types of policies that would ensure creation of decent jobs for all. In some countries that took
IMF loans a key part of the Fund programme is a retrenchment of public sector jobs.

Boosting the IFIs

The rest of the G20 package was an update on previous announcements or warm words about the
possibility that some countries might take action in small groups. "On voluntary basis" is used
twice and "ministers will explore" another two times. G20 voluntary commitments included
"funding programmes such as the Scaling Up Renewable Energy Program and the Energy for the
Poor Initiative, and to increasing and more closely harmonising our bilateral efforts."

Another voluntary area was on the use of the more than $280 billion worth of special drawing
rights (SDRs), the IMF-created reserve asset, that were distributed in early September. More than
$180 billion worth of these went to rich countries and NGOs had demanded that they be re-
transferred so that they would benefit those that needed them. These ideas were shot down by the
IMF in September, so the G20 wants now to look at "mechanisms that could allow the
mobilisation of existing [SDR] resources to support the IMF's lending to the poorest countries."
That would transform conditionality-free SDRs into conditionality-laden loans from the IMF
(see Update 67).

What about social protection?

The communiqué mentions that the World Bank should strengthen: "its focus on food security
through enhancements in agricultural productivity and access to technology, and improving
access to food;" and "its focus on human development and security in the poorest and most
challenging environments;" by contributing "to financing the transition to a green economy
through investment in clean energy, energy efficiency and climate resilience."
However, civil society organisations in the South and the North are deeply concerned about the
increasing role given to the World Bank as provider of global public goods, such as finance for
climate change and food security. An analysis of the 2008 World Development Report by
German NGOs shows that the Bank still encourages small farmers to become part of the global
value chain of agricultural production in order to graduate from poverty. This is the very
approach that promoted agricultural sector privatisation and liberalisation in the 1990s and that
turned 70 per cent of the developing countries into net food importers, thus making them
extremely vulnerable to the vagaries of the international commodities markets. It is thus very
unclear that the Bank is well placed to promote the types of agricultural models that will enhance
developing countries' food sovereignty and food security for the world's poor. Likewise, the
Bank continues to fund fossil fuel projects which seriously calls into question the ability of the
Bank to take up a role at all in climate change funding.

The communique also calls on the Bank to provide "support for private-sector led growth and
infrastructure to enhance opportunities for the poorest, social and economic inclusion, and
economic growth." It also called for the phasing out of all fossil fuel subsidies, a measure which
will be supported by environmental advocates. However, past attempts to do this, for example
the IMF conditions in Indonesia in 1998, have generated widespread public anger. Much of the
problem will be implementation of promised "targeted support for the poorest".

The leaders in Pittsburgh also gave some work to their underlings, without any specific timelines
or objectives. They asked "relevant ministers to explore ... the benefits of a new crisis support
facility in IDA to protect low-income countries from future crises." This comes on top of the
Bank's unsuccessful efforts to boost IDA resources through so-called frontloading. Under the
G20 London communiqué, low-income countries were to be allowed to draw down their IDA
resources early, but this would have left a gap in their budgets in a few years time without some
more resources.

Also to be explored is "the enhanced use of financial instruments in protecting the investment
plans of middle income countries from interruption in times of crisis, including greater use of
guarantees." This is a reference to a potential increase in the World Bank's treasury operations
that give developing countries tools to hedge risks by using financial markets. Some have also
posited that the World Bank should directly guarantee sovereign debt on its own balance sheet,
an idea which will be resisted by some rich countries as too risky for the Bank.

IFI governance changes lack ambition

In a move that has generated significant media coverage, the G20 made a commitment "to a shift
in International Monetary Fund quota share to dynamic emerging markets and developing
countries of at least 5 per cent from over-represented countries to under-represented countries."
The details of how to accomplish this shift are to be worked out in time for the deadline set at the
previous G20 meeting of January 2011. The communiqué did commit the Fund to "using the
current quota formula as the basis to work from", but this ignores that the current formula design,
if implemented in full, would actually shift votes away from developing countries and towards
rich countries. The G20 commitment leaves vague whether there will be some fiddling with the
formula and implementing the quota shift to avoid supposedly 'underrepresented' countries such
as Luxembourg, Spain, Japan, the United Kingdom, and the United States increasing their voting
weights.

Though the IMF already had a shift of a few percentage points in voting rights in 2008 and is
now promising another 5 per cent, at the World Bank there will be "an increase of at least 3 per
cent of voting power for developing and transition countries." This wholly unimpressive target
has been lambasted by some NGOs, who have been supporting the idea that as an institution that
is about development cooperation and partnership, borrowing countries should have at least half
the voting rights. NGO Oxfam International has highlighted that the Bank's goals on governance
reform also continue to classify some high-income countries under the category 'developing and
transition countries' for the purpose of discussing voting rights.

Reforming the international governance architecture

The other exciting development was the now much discussed decision of the G20 to appoint
itself the guardian of the world economy. The communiqué proclaimed: "We designated the G20
to be the premier forum for our international economic cooperation", essentially giving the G7/8
a further shove out of the economic policy making sphere. Pundits theorised that the G8 would
turn into an extra-UN forum for discussing security and geopolitical strategy while economic
issues will be handled with the emerging markets at the table at the G20.

This is of course an improvement over when the G7 made economic policy. However the power
of the so called G1, the United States, still exerts a strong influence over the G20 agenda. The
G20 has committed to two meetings next year at the leaders level, one in Canada in June next to
the scheduled G8 meeting, and one in Korea in November. Canada is the 2010 G8 chair, whereas
Korea is the G20 chair for the year. The communiqué then envisages that the G20 will become
annual affairs starting in 2011 with a meeting France.