If you ask G20 President India, the three biggest takeaways from the recently concluded meeting of Finance Ministers and Central Bank Governors (FMCBG) are that there is real progress on global debt reduction, that many countries are interested in seeking India’s help to build or improve their own digital payment systems, and that most nations have come around to India’s rather bearish views on cryptocurrency.
At the media briefing on Saturday, a visibly pleased Reserve Bank of India (RBI) Governor Shaktikanta Das said most of the G-20 partners agreed that cryptocurrencies should be regulated with a view to controlling risks and checking proliferation.
“There is now wide recognition and acceptance of the fact that cryptocurrencies, or crypto assets, involve several major risks to financial stability, to monetary systems, to cyber security issues, and to overall financial stability … the effort is to develop an international framework, an international architecture to deal with this problem,” Das said.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva had earlier said if regulations failed, banning cryptocurrencies should be an option, something the RBI has been keen on.
Das, Union Finance Minister Nirmala Sitharaman, and Economic Affairs Secretary Ajay Seth can look back at the first such meeting under India’s presidency with some satisfaction. However, getting all the G20 nations, with their own competing interests, to agree to the key agenda items was no easy task.
Business Standard spoke to more than half a dozen officials from the Ministries of Finance and External Affairs and the RBI, to get a sense of the discussions taking place behind the scenes. Just drafting the chair summary statement, which all nations agreed to around 5 pm on February 25, took days of deft negotiations by the host nation.
Most of the Indian delegates, including Chief Economic Advisor V Anantha Nageswaran, were up till 2 am on the intervening night of February 24 and 25, working on the language of the summary which would be acceptable to all parties.
The Russian cloud
Given that the FMCBG meeting in Bengaluru coincided with the war in Europe entering its second year, there was concern that it would overshadow all other agenda items. It very nearly did. “We knew the G7 nations would like to keep the focus on Russia and may even want to talk sanctions, even though FMBCG is not the right forum for that. But some of us were taken aback by the extent of their posturing,” said a senior official.
“Things happened very fast in the days leading up to the meeting as fresh sanctions were announced against Russia, military aid poured into Ukraine, and (US President) Joe Biden visited Kyiv. The G7 nations used our platform to keep up the pressure,” the person said. Officials said the internal discussions were mostly cordial although some western nations did use strong language regarding Russia.
The G7 nations are Canada, France, Germany, Italy, Japan, the United States, and the United Kingdom, all of which are part of the G20 as well.
In press conferences on February 23, 24 and 25, the finance ministers of the US, Japan, Germany, France and Spain spoke in one voice and called for additional sanctions against Russia. “I want to make it very clear that we will oppose any step-back from the statement of the leaders in Bali on this question of the war in Ukraine,” French Finance Minister Bruno Le Marie said.
India’s chair summary did adopt the same language on the Ukraine war as the Bali Leaders Declaration of November 2022, which was decided upon by the G-20 Heads of States. Officials said that a conscious decision was taken for Sitharaman to call out Russia and China by name since many western delegates had earlier given the impression to the media that it was India that opposed the use of the word ‘war’.
Progress on debt
India banked on its friendly relations with Russia and western nations to ensure that tangible progress was made on key agenda items.
“We recognize the urgency to address debt vulnerabilities in low and middle-income countries. Strengthening multilateral coordination by official bilateral and private creditors is needed to address the deteriorating debt situation and facilitate coordinated debt treatment for debt-distressed countries,” the chair summary stated on the issue of unsustainable debt of low and middle income nations.
Sitharaman said the G-20 nations were now looking for a swift conclusion of the work on debt treatment for Zambia, Ethiopia, Ghana and Sri Lanka.
While there were some sticking points regarding China and private lenders, officials said that discussions were positive, especially since India, the IMF, and the World Bank took the initiative to convene a global debt roundtable.
“China’s contention has been that any debt restructuring should happen on a bilateral basis and the multilateral development institutions should not be involved,” said another official.
“However, they are still part of the ongoing discussions, and we expect a stronger resolution on the matter at the spring meeting in Washington DC in April, and the second FMCBG meeting in Gandhinagar in July,” said another official.