G20 Finance Track meetings to address trade uncertainty and global economic imbalances

The G20 Finance and Central Bank Deputies meeting on Monday outlined how the upcoming discussions will revolve around enabling a conducive environment for constructive dialogue on  pivotal global trade issues.

This comes as the United States, the world's largest economy, has created uncertainty across global trade by imposing hefty reciprocal import tariffs on its trading partners, including emerging economies whose size pales in comparison to the US.  

Dr Rashad Cassim, deputy governor of the South African Reserve Bank, said the World Trade Organisation was the global institution that has been working for decades to create fairness in the global trading system.

However, Cassim said the G20 has a broader mandate than the world trade system.

"So, the challenge we're going to face at this meeting is really having a conversation around the table to kind of assess what exactly is the source of imbalances in the global economy," he said.

"Are there real concerns that some countries are more protectionist than others? So, it's really about creating an environment where you can have a constructive conversation on trade issues."

Cassim said that uncertainty was a two-sided problem.

"Uncertainty means at a time when we all need growth to be stimulated, we need growth to gain momentum. Tariff uncertainty does have an effect. It creates supply chain issues. It also creates uncertainty for inflation, although at this stage, it's the tariff imposer that has to deal with inflation more than the country who is being the victim of a tariff imposition," Cassim said.

He added that he was happy that the US delegates were at the meeting.

"They've been participating in our communique process. We've had a troika with them. In the G20, you have a troika. So the delegates are here. They present their views as do others. And the discussions have been very constructive," he said.

"Remember, the point is countries have different views and you've got to find common ground. And in the end, everyone would make a claim that we want to get growth moving in the global economy. We want to deal with obstacles to growth. We want to make sure that there are no financial stability risks."

Cassim said that the G20 worked best when there is an economic crisis.

“It worked particularly well during the great financial crisis. It worked very well during the COVID-19 pandemic, where countries collectively could agree on regulations, on resources, and transfer of resources to developing countries," he said.

"We are currently in a very difficult situation. One of the manifestations of being in a difficult situation is that it is often very hard to get a communique, which is a representation of a collective agreement on the direction of the finance track. So, we are in a difficult time."

Cassim said that they are hopeful that a communique will be issued at the end of the meetings, or at best, a Chair Summary that will articulate the problems.

Dr Duncan Pieterse, director-general of the National Treasury, said the multilateral system was being tested, and the G20's collective ability to respond, will shape the pace of recovery, but also the prospects for inclusive and sustainable development.

Pieterse said the International Monetary Fund and the World Bank will update the meeting on the Global Sovereign Debt Roundtable (GSDR) on Tuesday.

“This discussion is geared towards promoting information exchange between the GSDR and the G20 to enhance the effectiveness of both platforms while respecting the distinct roles," he said.

"Significant progress has been made on the GSDR work, including the publication of the GSDR playbook on sovereign debt restructurings during the Spring Meetings in April, and another important milestone that was achieved was the publication of a G20 note on the steps of debt restructuring under the common framework."

Pieterse added that they will have a few sessions on communique drafting on both days od the meeting.

"We really want to thank the G20 members for very constructive inputs and engagements thus far, which started last week virtually, and we believe that those engagements have set a very strong foundation for our discussions over the next two days," he said.

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Cassim said that uncertainty was a two-sided problem.

"Uncertainty means at a time when we all need growth to be stimulated, we need growth to gain momentum. Tariff uncertainty does have an effect. It creates supply chain issues. It also creates uncertainty for inflation, although at this stage, it's the tariff imposer that has to deal with inflation more than the country who is being the victim of a tariff imposition," Cassim said.

He added that he was happy that the US delegates were at the meeting.

"They've been participating in our communique process. We've had a troika with them. In the G20, you have a troika. So the delegates are here. They present their views as do others. And the discussions have been very constructive," he said.

"Remember, the point is countries have different views and you've got to find common ground. And in the end, everyone would make a claim that we want to get growth moving in the global economy. We want to deal with obstacles to growth. We want to make sure that there are no financial stability risks."

Cassim said that the G20 worked best when there is an economic crisis.

“It worked particularly well during the great financial crisis. It worked very well during the COVID-19 pandemic, where countries collectively could agree on regulations, on resources, and transfer of resources to developing countries," he said.

"We are currently in a very difficult situation. One of the manifestations of being in a difficult situation is that it is often very hard to get a communique, which is a representation of a collective agreement on the direction of the finance track. So, we are in a difficult time."

Cassim said that they are hopeful that a communique will be issued at the end of the meetings, or at best, a Chair Summary that will articulate the problems.

Dr Duncan Pieterse, director-general of the National Treasury, said the multilateral system was being tested, and the G20's collective ability to respond, will shape the pace of recovery, but also the prospects for inclusive and sustainable development.

Pieterse said the International Monetary Fund and the World Bank will update the meeting on the Global Sovereign Debt Roundtable (GSDR) on Tuesday.

“This discussion is geared towards promoting information exchange between the GSDR and the G20 to enhance the effectiveness of both platforms while respecting the distinct roles," he said.

"Significant progress has been made on the GSDR work, including the publication of the GSDR playbook on sovereign debt restructurings during the Spring Meetings in April, and another important milestone that was achieved was the publication of a G20 note on the steps of debt restructuring under the common framework."

Pieterse added that they will have a few sessions on communique drafting on both days od the meeting.

"We really want to thank the G20 members for very constructive inputs and engagements thus far, which started last week virtually, and we believe that those engagements have set a very strong foundation for our discussions over the next two days," he said.

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Dr Rashad Cassim, deputy governor of the South African Reserve Bank, said the World Trade Organisation was the global institution that has been working for decades to create fairness in the global trading system.

However, Cassim said the G20 has a broader mandate than the world trade system.

"So, the challenge we're going to face at this meeting is really having a conversation around the table to kind of assess what exactly is the source of imbalances in the global economy," he said.

"Are there real concerns that some countries are more protectionist than others? So, it's really about creating an environment where you can have a constructive conversation on trade issues."

Cassim said that uncertainty was a two-sided problem.

"Uncertainty means at a time when we all need growth to be stimulated, we need growth to gain momentum. Tariff uncertainty does have an effect. It creates supply chain issues. It also creates uncertainty for inflation, although at this stage, it's the tariff imposer that has to deal with inflation more than the country who is being the victim of a tariff imposition," Cassim said.

He added that he was happy that the US delegates were at the meeting.

"They've been participating in our communique process. We've had a troika with them. In the G20, you have a troika. So the delegates are here. They present their views as do others. And the discussions have been very constructive," he said.

"Remember, the point is countries have different views and you've got to find common ground. And in the end, everyone would make a claim that we want to get growth moving in the global economy. We want to deal with obstacles to growth. We want to make sure that there are no financial stability risks."

Cassim said that the G20 worked best when there is an economic crisis.

“It worked particularly well during the great financial crisis. It worked very well during the COVID-19 pandemic, where countries collectively could agree on regulations, on resources, and transfer of resources to developing countries," he said.

"We are currently in a very difficult situation. One of the manifestations of being in a difficult situation is that it is often very hard to get a communique, which is a representation of a collective agreement on the direction of the finance track. So, we are in a difficult time."

Cassim said that they are hopeful that a communique will be issued at the end of the meetings, or at best, a Chair Summary that will articulate the problems.

Dr Duncan Pieterse, director-general of the National Treasury, said the multilateral system was being tested, and the G20's collective ability to respond, will shape the pace of recovery, but also the prospects for inclusive and sustainable development.

Pieterse said the International Monetary Fund and the World Bank will update the meeting on the Global Sovereign Debt Roundtable (GSDR) on Tuesday.

“This discussion is geared towards promoting information exchange between the GSDR and the G20 to enhance the effectiveness of both platforms while respecting the distinct roles," he said.

"Significant progress has been made on the GSDR work, including the publication of the GSDR playbook on sovereign debt restructurings during the Spring Meetings in April, and another important milestone that was achieved was the publication of a G20 note on the steps of debt restructuring under the common framework."

Pieterse added that they will have a few sessions on communique drafting on both days od the meeting.

"We really want to thank the G20 members for very constructive inputs and engagements thus far, which started last week virtually, and we believe that those engagements have set a very strong foundation for our discussions over the next two days," he said.

BUSINESS REPORT