We, the Finance Ministers and Central Bank Governors of the G20, held our seventh meeting in Xianghe, Hebei province, China. Under the theme of "Global Cooperation: Promoting Balanced and Orderly World Economic Development", we discussed a wide variety of critical global economic issues and reconfirmed our shared vision and responsibility for achieving balanced and sustainable growth.
We welcomed the ongoing expansion of the world economy, while recognizing low growth and increasing poverty in some developing countries. We also emphasized that the risks – long lasting high and volatile oil price, widening global imbalances and rising protectionist sentiments – are to the downside and could exacerbate uncertainties and aggravate global economic and financial vulnerabilities. We agreed addressing them must be done in a way that sustains strong global economic growth and takes account of shared responsibilities. Bearing in mind our shared responsibilities, we are determined to implement the necessary fiscal, monetary and exchange rate policies, and accelerate structural adjustments to resolve these imbalances and overcome these risks.
We are concerned that long lasting high and volatile oil prices could increase inflationary pressures, slow down growth, and cause instability in the global economy. We agree to strengthen our cooperation on these issues and stress the need to increase investment, production, and refining capacities, and to enhance dialogue between oil suppliers and consumers through the relevant fora, such as International Energy Forum (IEF). We also need to strengthen oil market transparency to improve market efficiency. We stress the importance of promoting energy conservation and efficiency, including adopting and transferring new technologies, developing alternative and renewable energy sources, and reducing subsidies on oil products. We welcome the work launched by the World Bank and partners on the creation of a long-term investment framework for clean energy and sustainable development and the upcoming creation by the IMF of a new window in the Poverty Reduction and Growth Facility (PRGF) to help poor countries respond to commodity shocks, including oil price hikes.
We agreed a successful WTO Doha Development Round is critical for ensuring globalization truly benefits all countries, and would make a key contribution to achieving the Millennium Development Goals (MDGs). We urge all parties concerned to provide the necessary political impetus to promote trade liberalization, fight protectionism, and make real progress at the WTO Ministerial Conference to be held in Hong Kong, China, later this year, with the view to concluding the negotiations by the end of 2006. We are committed to significantly increasing market access for goods and services, reducing trade-distorting domestic support, eliminating all forms of export subsidies in agriculture, providing effective special and differential treatment for developing countries, and increasing aid for trade to enhance the capacity of developing countries to take advantage of expanded trade opportunities.
We acknowledge the Bretton Woods Institutions (BWIs) have made significant contributions to growth and development, and the improved functioning of the international monetary systems. However, the evolution of the international economy and global financial markets requires a continuing review of the representation, operations, and strategies of the BWIs. We have discussed the necessity for, and committed our strong support to, reforming the BWIs. We have issued a “G20 Statement on Reforming the Bretton Woods Institutions”, which underlines the importance of improving governance, management and operational strategies of these institutions, and aims at providing support to the reform of the BWIs.
We noted the outcomes of the UN Millennium Review Summit and the progress that the international community has made toward achieving the MDGs. We are concerned that a number of developing economies may not be able to attain the MDGs without substantial additional support. We call on the international community to fulfill its Monterrey Commitments and on recipient countries to make further progress in implementing sound policies. We note efforts from some of the G20 countries to implement innovative financing mechanisms.[1] In order to demonstrate the G20’s firm commitment toward achieving the MDGs, we have issued the “G20 Statement on Global Development Issues” which represents our shared understanding on development approaches and financing, aid effectiveness, trade for development, and global partnership for poverty reduction, and will be reviewed by the G20 over coming years.
We noted population-ageing has become a serious global challenge that requires comprehensive research. We discussed the impact of an ageing population on economic growth, social security, and financial and labor markets. We recognized national efforts are essential to address these challenges. We also recognized global cooperation is indispensable in this regard. We noted access to foreign labor markets could provide strong incentives for people in developing countries to acquire education and skills. We also acknowledged migrant remittances have become an important and stable source of income and made significant contributions to economic development and poverty reduction in home countries. We urge countries and the international organizations to work together to improve remittance services, enhance access to, and knowledge of, formal financial systems, and collect better data, which should facilitate a reduction in transaction costs.
We underscored the importance of the G20 Accord for Sustained Growth adopted in Berlin in 2004. We note development approaches are evolving over time, and thus need to be updated as economic challenges unfold. We will continue to review the G20 Accord through sharing our experiences in implementation. We recognized there is no uniform development approach that fits all countries. Each country should be able to choose the development approaches and policies that best suit its specific characteristics, while benefiting from their accumulated experience in policy making over the last decades, including the importance of strong macroeconomic policies for sustained growth. Our current policy priorities are outlined in the attached G20 Reform Agenda.
We reaffirmed our commitments to the purposes of the “G20 Statement on Transparency and Exchange of Information for Tax Purposes” that was endorsed last year. In this context, we welcome the efforts of the OECD Global Forum on Taxation to promote high standards of transparency and effective exchange of information for tax purposes.
We noted progress has been made recently in increasing the use of Collective Action Clauses (CACs) in international bond markets. We welcome the efforts by borrowing countries and private-sector creditors to broaden the consensus on the Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets, which could contribute to strengthening crisis prevention and enhancing predictability of crisis management.
We are grateful to China for its excellent stewardship of the G20 meetings in 2005, and will continue our joint efforts under the Australian chair in 2006. We agreed today that South Africa will chair the G20 in 2007.
Note:
[1] Such as the International Finance Facility (IFF) and its pilot – the IFF for Immunization, a contribution on air travel tickets, the Millennium Challenge Account, and other financing measures.
