G20

BY: ABHISHEK SHARMA

G20 INTRO
The Group of Twenty Finance Ministers and Central
Bank Governors (G-20, G20, Group of Twenty) is a group
of  FINANCE MINISTERS and CENTRAL BANK governors
from 20 economies: 19 countries plus the EUROPEAN
UNION, which is represented by the PRESIDENT of
the EUROPEAN COUNCIL and by the European CENTRAL
BANK. Collectively, the G-20 economies comprise 85% of
global gross national product, 80% of world
trade (including EU intra-trade) and two-thirds of
the world population.
The G-20 was proposed by
former Canadian Finance
Minister Paul Martin (later,
Prime Minister) for cooperation
and consultation on matters
pertaining to the international
financial system. It studies,
reviews, and promotes
discussion (among key
industrial and emerging market
countries) of policy issues
pertaining to the promotion of
international financial stability,
and seeks to address issues that
go beyond the responsibilities
of any one organization.
MEMBER COUNTRIES
In 2010, there are 20 members
of the G-20. These include, at
the leaders summits, the
leaders of 19 countries and of
the European Union, and, at the
ministerial-level meetings, the
finance ministers and central
bank governors of 19 countries
and of the European Union. In
addition, Spain and the
Netherlands took part in the last
35 meetings despite not being
recognized members.
 SOUTH AFRICA
CANADA
MEXICO
UNITED STATES
ARGENTINA
BRAZIL
CHINA
JAPAN
SOUTH KOREA
INDIA
INDONESIA
SAUDI ARABIA
RUSSIA
TURKEY
EUROPEAN UNION
FRANCE
GERMANY
ITALY
UK
AUSTRALIA
In addition to these 20 members, the following forums
and institutions, as represented by their respective chief
executive officers, participate in meetings of the G-20:
the Managing Director of the International Monetary
Fund
the Chairman of the International Monetary Fund
the President of the World Bank
International Monetary and Financial Committee
the Chairman of the Development Committee.
 2009 g20
London
Summit

2008 washington summit

2010 g20 seoul summit

BALANCE OF PAYMENT
A balance of payments (BOP) sheet is an
accounting record of all monetary transactions
between a country and the rest of the
world. These transactions include payments for
the
country's exports and imports of goods, services
and financial capital, as well as financial
transfers.
The BOP summarizes international transactions for a
specific period, usually a year, and is prepared in a
single currency, typically the domestic currency for
the country concerned. Sources of funds for a nation,
such as exports or the receipts of loans and
investments, are recorded as positive or surplus
items. Uses of funds, such as for imports or to invest
in foreign countries, are recorded as a negative or
deficit item.
When all components of the BOP sheet are included it
must balance – that is, it must sum to zero – there can
be no overall surplus or deficit. For example, if a
country is importing more than it exports, its trade
balance will be in deficit, but the shortfall will have to
be counter balanced in other ways – such as by funds
earned from its foreign investments, by running down
reserves or by receiving loans from other countries.
BOP COMPONENTS
CURRENT ACCOUNT

CAPITAL ACCOUNT

STATISTICAL
DISCREPANCY ACCOUNT

OFFICIAL RESERVES
ACCOUNT
CURRENT ACCOUNT
Includes all imports and
exports of goods and
services.
Includes unilateral
transfers of foreign aid.
If the debits exceed the
credits, then a country is
running a trade deficit.
If the credits exceed the
debits, then a country is
running a trade surplus.
CAPITAL ACCOUNT
The capital account measures the difference between
U.S. sales of assets to foreigners and U.S. purchases of
foreign assets.
The U.S. enjoys about a $444,000,000,000 capital
account surplus—absent of U.S. borrowing from
foreigners, this “finances” our trade deficit.
The capital account is composed of Foreign Direct
Investment (FDI), portfolio investments and other
investments.
STATISTICAL DISCREPANCY ACCOUNT
There’s going to be
some omissions and
mis recorded
transactions—so we
use a “plug” figure to
get things to balance.
OFFICIAL RESERVE ACCOUNT
Official reserves assets
include gold, foreign
currencies, SDRs,
reserve positions in the
IMF.
BOP IDENTITY
BCA + BKA + BRA = 0
where
BCA = balance on current account
BKA = balance on capital account
BRA = balance on the reserves account

Under a pure flexible exchange rate regime,

BCA + BKA = 0
BOP OF SOUTH AFRICA
Current Account -166
Balance on goods 4,966
Balance on services -546
Balance on income -3,846
Current transfers -739
Capital Account -32
Financial Account 501
Direct investment abroad -3686
Direct investment in South Africa 7,162
Portfolio investment assets -5,331
Portfolio investment liabilities -2,971
Other investment assets -1,432
Other investment liabilities -614
Net Errors and Omissions 1,855
Reserves and Related Items -2158
CANADA
Current account
The balance on trade in goods declined $2.5 billion in the
second quarter to return to a deficit position, following two
quarters of surplus. Exports advanced by less than imports,
largely reflecting trade results with the United States. The
goods surplus with the United States shrank by $2.3 billion,
following two quarters of gains.
Exports of goods rose by $1.2 billion, substantially less than in
the previous quarter. Energy products and industrial goods
were the two main contributors to the recovery in goods
exported during the previous three quarters, but they both
declined in the second quarter of 2010.
 Imports of goods
increased $3.7 billion in the
second quarter, led by machinery
and equipment imports, which
rose by $1.9 billion on higher
volumes for all components,
while prices were down for a fifth
quarter. Imports of industrial
goods continued to strengthen,
up $1.2 billion, with half of the
gains from metal and metal ores.
Automotive products imports
edged up, as stronger imports of
automotive parts were largely
offset by lower imports of cars
and trucks.
Canadian travel abroad widens
the deficit on services
The deficit on trade in services
expanded by $0.3 billion in the
second quarter, led by travel
and travel related components.
The travel deficit reached a high
of $3.5 billion, up $0.5 billion
from the previous quarter.
Canadian spending abroad
increased $0.4 billion in the
second quarter, reflecting
both travel to the United
States and overseas
destinations.
Lower payment leads to
decline in investment
income deficit
Canadian investment in
foreign securities
remains modest &
focused on equities.
Outward direct
investment strengthens
& inward slows
MEXICO
Current Account Balance
(% GDP) for Mexico in
year 2009 is -0.599 %.
• The capital account
had a surplus of
US$8,142m, equivalent
to 3.2% of GDP, which
easilyfinanced the
small current-account
deficit.
Current account balance (US$m)
2009
Annual 2Q09 3Q09 4Q09 1Q10
Current Account -5,721 -62 -3,568 -416
Trade Balance -4,602 450 -2,786 26 372
Non-Factorial -8,025 -1,755 -2,685 -2,512
Factorial Balance -14,561 -4,436 -3,530 -2,767
Transfers 21,468 5,679 5,432 4,836
Oil Trade Balance 10,448 2,742 2,137 3,875
Trade Balance Oil -15,050 -2,292 -4,923 -3,848
 Annual 2009
Capital Account 17,086 -5,240 8
Liabilities 35,648 9,682
Indebtedness 13,985 -799
Devlopment Banks 794 -235
Camercial Banks -25 -1,165
Bank of Mexico 7,229 3,221
Non-Banking Public Sector 9,638 623
Non-Banking Private Sector -3,651 -3,243
Foreing Investment 21,663 10,481
Direct 13,978 9,588
Portfolio 7,685 893
Stock Market 4,169 1,443
Money Market 3,516 -550
Assets -18,562 -14,922
In foreing Banks -7,598 -3,868
Direct Investment from Mexicans -10,964 -11,054
Errore & omissions -6,031 -4,299
Changes in net reserves -5,397 -11,260
Valuation Adjustments -63 -14
US
The U.S. current-account deficit—the combined balances on
trade in goods and services, income, and net unilateral
current transfers—increased to $123.3 billion (preliminary) in
the second quarter of 2010, from $109.2 billion.

Goods and services : The deficit on goods and services

increased to $131.6 billion in the second quarter from $114.5
billion in the first. 
Goods : The deficit on goods increased to $169.6 billion in the
second quarter from $151.3 billion in the first. Goods
exports increased to $316.1 billion from $305.6 billion.
Goods imports increased to
$485.7 billion from $457.0
billion.
Services : The surplus on
services increased to $38.0
billion in the second quarter
from $36.9 billion in the first.
Services receipts increased to
$135.9 billion from $133.3
billion.
Services payments increased
to $97.9 billion from $96.4
billion.
The surplus on income
increased to $41.2 billion in
the second quarter from
$40.2 billion in the first.
Investment income: Income
receipts on U.S.-owned assets
abroad increased to $161.1
billion from $160.5 billion.
The increase was more than
accounted for by other private
receipts.
Income payments on foreign-
owned assets in the United
States declined to $117.8
billion from $118.3 billion.
Unilateral current transfers
Net unilateral current transfers to
foreigners were $32.9 billion in
the second quarter, down from
$34.9 billion in the first. The
decrease was more than
accounted for by U.S.
government grants.
Capital Account
Net capital account payments
(outflows) remained close to zero
for the second consecutive
quarter.
Financial Account
Net financial inflows were $36.6 billion in the second
quarter, up from $34.7 billion in the first. Growth in both
U.S.-owned assets abroad and foreign- owned assets in
the United States slowed, but the slowdown in U.S.-
owned assets abroad exceeded that of foreign-owned
assets in the US
U.S. official reserve assets increased $0.2 billion in the
second quarter, following an increase of $0.8 billion in the
first.
ARGENTINA
Current Account -4553
Balance on goods 7451
Balance on services -4092
Balance on income -8095
Current transfers 183
Capital Account 101
Financial Account -13590
Direct investment abroad 123
Direct investment in Argentina 3214
Portfolio investment assets 2019
Portfolio investment liabilities -9516
Other investment assets -3940
Other investment liabilities -5490
Net Errors and Omissions -3362
Reserves and Related Items 21405
BRAZIL
the current account was worse in the first quarter of
2010 (deficit of US$ 12.1 billion) as compared with the
similar period in 2009 (US$ 4.9 billion).
Trade
Exports 39230
Imports 38337
Balance 892
Services & Revenues Income 9409
Expense 23232
Balance -
13823
Unilateral Transfers
786
C/A Balance -
12931
In the first quarter of 2010, Brazil raised US$ 19.37 billion
from the following sources:
 Source of financing US$ Millions
Capital Account $239
Direct Investment -$271
Portfolio Investments $8774
Derivatives -$26
Other Investments $10655
Total $19371
CHINA
 I. Current Account134,459,941
  A. Goods and Services
102,319,724
   a. Goods 118,976,618
   b. Services -16,656,894
   1.Transportation -9,148,812
   2.Travel 2,846,806
   3.Communications Services 63,967
   4.Construction Services 1,288,000
   5.Insurance Services -4,248,751
   6. Financial Services -26,701
   7. Computer and Information Services 1,579353
   8.Royalties and Licensing Fees -4,435,022
   9.Consulting Service 2,291,165
  10.Advertising and Public Opinion Polling 152,221
  11.Audio-visual and Related Services -104,943
  12. Other Business Services -1,300,352
  13. Government Services, 79,789
 B. Income 16,936,295
   1.Employee Compensation 2,662,501
   2.Investment Income 14,273,794
   C. Current Transfers 15,203,922
    1.General Government -128,280
    2. Other Sectors 15,332,202
 II. Capital and Financial Account 60,994,554
   A. Capital Account 1,348,333
   B. Financial Account 59,646,222
   1. Direct Investment 15,561,165
2. Portfolio Investment 20,184,651
3. Other Investment 23,900,406
 III. Reserves Asset -185,941,174
   3.1 Monetary Gold 0
   3.2 Special Drawing Rights -28,637
   3.3 Reserves Position in the Fund-336,537
   3.4 Foreign Exchange -185,576,000
   3.5 Other Claims 0
 IV. Net Errors and Omissions -9,513,322
     
JAPAN
Japan's current account surplus decreased in 2009 for the second
consecutive year to 13.3 trillion yen, down from 16.4 trillion yen
in 2008, mainly due to a decrease in the income surplus. The
capital and financial account deficit (net outflow) decreased to
12.7 trillion yen in 2009, down from 18.4 trillion yen in 2008.
Reserve assets continued to increase, rising by 2.5 trillion yen in
2009 compared to an increase of 3.2 trillion yen in 2008.
Japan's balance of payments for 2009 shows that the current
account surplus earned is mirrored by reverse flows abroad in
the form of a capital and financial account deficit (outflows) and
an increase in reserve assets.
SOUTH KOREA
Current Account 8,617
Balance on goods 13,392
Balance on services -3,527
Balance on income -886
Current transfers -363
Capital Account -443
Financial Account 2,543
Direct investment abroad -2,600
Direct investment in South Korea 3,198
Portfolio investment assets -5,499
Portfolio investment liabilities 11,856
Other investment assets 7,458
Other investment liabilities- 11,764
Net Errors and Omissions -2,698
Reserves and Related Items -13,416
INDIA
MAJOR ITEMS OF INDIA’S BALANCE OF PAYMENTS
(US $ MILLION)april-dec 2009-10
Exports 124473
Imports 213988
Trade balance -89515
Invisibles,net 59185
Current account balance-30330
Capital account 41630
Changes in reserves -11330
INDONESIA
Current Account 6899
Balance on goods 22695
Balance on services -10380
Balance on income -6936
Current transfers 1520
Capital Account ...
Financial Account -7616
Direct investment abroad ....
Direct investment in Indonesia-
3278
Portfolio investment assets ....
Portfolio investment liabilities -
245
Other investment assets -125
Other investment liabilities -
3968
Net Errors and Omissions 702
Reserves and Related Items
15
SAUDI ARABIA
Current account balance
2009 15.389 -88.53 %
The capital and financial account statement saw a reversal in net outflow
performance of past years due to a substantial inflow of reserve assets and
direct investments.
Direct investments abroad by Saudi entities fell to 8 billion in 2009 from 13
billion in 2008.
 Portfolio investments jumped to 74.1 billion in 2009 from 6.1 billion, mainly
due to a rise in the foreign assets of banks.
Foreigners’ swaps, on liabilities side of portfolio investments, recorded an
inflow of 8.3 billion in 2008 and an outflow of 20 million in 2009. Bank
clients invested some 36.7 billion abroad in 2009, almost quadruple 2008
levels.
The errors and omissions category captures the statistical discrepancies that
arise in gathering such data. In 2007 it was at SR58.5 billion but jumped by
more than two times in 2009 to SR136 billion.
RUSSIA
Current Account 34,621
Balance on goods 47,839
Balance on services -8,501
Balance on income -3,959
Current transfers -759
Capital Account -9,378
Financial Account- 4738
Direct investment abroad -2533
Direct investment in Russia 2,469
Portfolio investment assets -77
Portfolio investment liabilities -730
Other investment assets -577
Other investment liabilities -3,444
Net Errors and Omissions 9,239
Reserves and Related Items 11,266
TURKEY
Current Account 3,396
Balance on goods -4,537
Balance on services 9,130
Balance on income -5,000
Current transfers 3,803
Capital Account…Financial Account -14,198
Direct investment abroad -497
Direct investment in Turkey 3,266
Portfolio investment assets -788
Portfolio investment
liabilities -3,727
Other investment assets
-156
Other investment liabilities
-12,296
Net Errors and Omissions
2086
Reserves and Related Items
12,888
EUROPEAN UNION

Current account

The seasonally adjusted current account of the euro area recorded
a deficit of EUR 4.6 billion in June 2010. This reflected deficits in
current transfers (EUR 7.8 billion) and income (EUR 1.6 billion),
which were partly offset by surpluses in goods (EUR 2.6 billion) and
services (EUR 2.2 billion).

Financial account

In the financial account , combined direct and portfolio investment
recorded net outflows of EUR 4 billion in June 2010, as the net
outflows in direct investment (EUR 7 billion) exceeded the net
inflows in portfolio investment (EUR 3 billion).
The net outflows in direct investment resulted predominantly
from net outflows in other capital (mostly inter-company
loans) (EUR 11 billion).
Portfolio investment recorded net inflows in equity
(EUR 16 billion), mainly reflecting net purchases of euro area
equity by non-residents (EUR 19 billion), which were to a large
extent offset by net outflows in debt instruments
(EUR 13 billion).
Other investment recorded net inflows of EUR 1 billion,
reflecting net inflows in other sectors (EUR 18 billion) which
were almost totally offset by net outflows in the Euro system
(EUR 12 billion).
FRANCE
Current Account 21
Balance on goods 3
Balance on services 18
Balance on income 15
Current transfers -15
Capital Account-0Financial Account -32
Direct investment abroad -83
Direct investment in France 53
Portfolio investment assets -84
Portfolio investment
liabilities 102
Other investment assets
-56
Other investment liabilities
36
Net Errors and Omissions
5
Reservesand Related Items
5
GERMANY
Current account 
The German current account recorded a surplus – in
unadjusted terms – of 32.2 billion in May 2010. The result was
thus 39.1 billion down on the level of the previous month.
This was attributable to a narrower trade surplus and to an
increased deficit on invisible current transactions, which
comprise services, income and current transfers.
Foreign trade 
According to provisional figures from the Federal Statistical
Office, in May the foreign trade surplus was down by 33.4
billion on the month to 39.7 billion.
Invisibles 
The deficit in invisible current
transactions expanded from 30.9
billion in April to 36.3 billion in
May. This was due to the fact that
a surplus in both income balance
and services turned into a deficit.
The deficit in current transfers fell
by 30.4 billion to 31.6 billion.
Portfolio investment 
In May, cross-border portfolio
investment resulted in net capital
imports of 326.2 billion,
compared with capital outflows
in both March and April.
Direct investment 
Direct investment once again
recorded net capital outflows
(36.0 billion). These were
largely the result of transactions
by German proprietors who
provided their foreign affiliates
with funds amounting to 39.7
billion, primarily through intra-
group loans.
Reserve assets
 The Bundesbank’s reserve
assets went up – at transaction
values – by 30.7 billion in May.
ITALY
Current Account -163
Balance on goods15, 862
Balance on services 203
Balance on income -10,280
Current transfers -5,949
Capital Account 846
Financial Account -3,211
Direct investment abroad 21,758
Direct investment in Italy 14,874
Portfolio investment assets -36,167
Portfolio investment liabilities 29,329
Other investment assets 717
Other investment liabilities10, 233
Net Errors and Omissions 1,940
UK
Current account
The UK current account recorded a deficit of £7.4 billion in the
second quarter of 2010, reduced from a revised deficit of £11.3
billion (originally published as a deficit of £9.6 billion) in the
previous quarter. The second quarter balance is equivalent to -2.0
per cent of GDP, compared to -3.1 per cent of GDP in the previous
quarter.

The current account deficit reduced as:

the income surplus increased by £6.5 billion to £9.3 billion
the deficit on current transfers reduced by £0.1 billion to £4.1
billion
However, this was partly offset as:
the surplus on trade in services
reduced by £1.4 billion to £10.5
billion
the deficit on trade in goods
increased by £1.2 billion to £23.2
billion
Trade in goods
Exports increased by £3.2 billion to
£65.5 billion, mainly due to an
increase in the exports of finished
manufactured goods, semi-
manufactured goods and oil. Imports
increased by £4.4 billion to £88.7
billion, primarily due to an increase
in the imports of finished
manufactured goods, oil and semi-
manufactured goods.
Trade in Services
Exports reduced by £0.4 billion to £39.3 billion, mainly due to a fall
in other business services and insurance services. Imports increased
by £1.0 billion to £28.8 billion, mainly due to an increase in the
imports of government services and travel services.
Income
UK earnings on investment abroad increased by £4.2 billion to £45.2
billion. This was primarily due to higher earnings on direct
investment abroad. Foreign earnings on investment in the UK fell by
£2.2 billion to £35.7 billion. This was mainly due to lower foreign
earnings on direct investment in the UK, which was partly offset by
an increase in foreign earnings on other investment in the UK.
Current Transfers
The deficit on current transfers fell by £0.1 billion to £4.1
billion. This was mainly due to lower payments to EU
institutions.
AUSTRALIA
CURRENT ACCOUNT
DEFICIT $16551M
NET GOODS & SERVICES
DECREASED BY 17.6% to
$4.6B
INCREASE IN GOODS
EXPORTED 3.8%
INCREASE IN GOODS
IMPORTED 1.5%
The NET INCOME DEFICIT decreased by 7.2% to
$11.9B . Income imports increased by 3.2% to $23.1B
but were more than offset by income exports which
increased by 17.8% to $11.2B. The main contributor to
the increase in income exports was a 40.5% increase in
income earned by Australians on foreign direct
Investment.