Millennium Post

G20 vows to rev up global growth by 2% in 5 years

World's top 20 nations on Sunday pledged to boost global growth by 2 per cent, or over $2 trillion, over five years, and agreed to work on automatic tax information flow and IMF reforms — meeting key demands of India.

The communique, issued after the G20 finance ministers and central bank governors meet, also took into account concerns of emerging economies, like India, about the impact of US stimulus withdrawal by asking central banks to calibrate and clearly communicate monetary policies.
‘We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than 2 per cent above the trajectory implied by current policies over the coming 5 years. This is over $2 trillion more in real terms and will lead to significant additional jobs,’ it said.
A satisfied Finance Minister P Chidambaram later said: ‘The communique has been drawn by the deputies sitting together and I think our concerns have been fully reflected in the communique’.

The G20 ministerial joint statement committed a global response to Base Erosion and Profit Shifting (BEPS) based on sound tax policy principles. ‘We endorse the common reporting standard for automatic exchange of tax information on a reciprocal basis and will work with all relevant parties...,’ it said.

The G20 also expressed hope that it will implement the automatic tax exchange information among themselves by 2015. Facing challenges to get trans-border details on tax issues, India has been pressing for smooth exchange of financial information. The G20 also expressed ‘deep regret’ over delay in IMF quota reforms implementation as the US is yet to ratify it. ‘Our highest priority remains ratifying the 2010 reforms, and we urge the US to do so before our next meeting in April,’ the two-page communique said.

Quota reforms, which were to be implemented by January 2014, will increase the say of emerging economies in IMF. On monetary policies, the communique said they need to remain accommodative in many advanced economies, and should normalise in due course, with the timing being conditional on the outlook for price stability and economic growth.

‘All our central banks maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated, in the context of ongoing exchange of information and being mindful of impacts on the global economy,’ it said.

The communique further said that G20 want to promote resilience in the financial system and greater certainty in the regulatory environment to support confidence and growth. ‘There is no room for complacency ... We will take concrete actions across the G20, including to increase investment, lift employment and participation, enhance trade and promote competition, in addition to macroeconomic policies,’ it said.
As per IMF's estimates, global growth is projected at about 3.7 per cent in 2014 and at 3.9 per cent in 2015. Meanwhile, IMF Chief Christine Lagarde said the global growth agenda set by G20 is laudable and attainable.
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