TWN Info Service on Finance and Development
G24 developing countries address looming threats to fragile global recovery process, and repeat earlier calls for improved surveillance, capital account regulations and governance reform
The Group of 24 (G24), an intergovernmental grouping of 24 developing country members in the International Monetary Fund (IMF) and World Bank, issued a communiqué on 22 September that called for maximizing the opportunities for developing countries to boost global demand and long-term growth through investments in areas such as infrastructure and agriculture. The communiqué also highlighted the challenges of job creation and inclusion in the face of growing inequality and economic instability, and stressed the importance of development strategies that are inclusive, dynamic and that guarantee fair opportunities for women, youth and the poor.
The G24 communiqué underscored the “important contribution” made by emerging market and developing countries to global recovery but expressed concern of the threats posed to the fragile recovery process by the eurozone debt crisis and its adverse spillovers globally.
The ministers called for “more decisive action by the Euro area to address the sovereign debt crisis and restore confidence,” and stressed for all developed countries to address weaknesses in bank balance sheets and accelerate structural reforms to support “strong, sustainable, balanced, and inclusive global growth.”
The G24 also stated that developed countries need
to ensure “credible medium-term fiscal consolidation,” reiterating the
macroeconomic trend led by the European Union and the
Regarding the risks from volatile capital flows
surging into developing and emerging market countries, in large part
from the continued expansionary monetary policy in the
On the IMF’s surveillance policy toward capital flows, the G24 reiterated their long-standing position that the Fund needs to “improve the even-handedness of surveillance and its effectiveness and traction, in particular with advanced economies. This reflects a history of discrimination in the IMF’s economic surveillance, where the flawed policies of developed countries (many of which led to the recent global financial crisis) are not reprimanded while those of developing countries are. The G24 further stated that ongoing efforts to improve surveillance are “undermined by inappropriate and weak implementation framework and practices.”
Differences between emerging market economies and less wealthy developing countries were recognized by the G24. The ministers stated that “there are many developing countries with unrealized potential,” and they called for “more intensified multilateral cooperation to tap this potential.
G24 ministers on global development issues and policies
The G24 addressed several key themes in global development policy, including development finance and investment, food and commodities, energy and climate finance. With regard to the global challenge of job creation and inequality, the G24 called on the IMF to place greater emphasis on job creation, inclusion and social impacts in its work with the Fund’s 186 country members. The “grave threat of growing inequality” to economic and political stability was also recognized, and the importance of “strategies that are inclusive, dynamic, and guarantee fair opportunities for women, youth, and the poor” was stressed.
The upcoming World Development Report (WDR) on jobs, produced by the World Bank, was called upon to “present concrete proposals for creating jobs and addressing persistent unemployment.” The current WDR on gender equality and development was “welcomed” without any additional mention by the G24 ministers except that of showing willingness to strengthen efforts to “overcome the existing gaps and target the multiple determinants of gender inequality.”
On the volatility of commodity prices and food and energy security the G24 called for “urgent actions to deal with the consequences of volatile commodity prices and long-term impediments to food and energy security, especially with respect to the most vulnerable countries and populations,” but did not mention the causes behind the excessive volatility of prices. In contrast, their April 2011 communiqué stated that “structural, cyclical and financial factors, as well as supply disruptions, all appear to play a role in explaining recent trends and increased volatility.”
G24 ministers highlighted the “growing gap” between the scale of climate finance needs in developing countries and the delivery of resources that developed countries had committed to provide, including the initial fast track commitments. It was also stressed that financing must be “additional and in compliance with the agreements reached under the United Nations Framework Convention on Climate Change.”
On energy production, G24 ministers prioritized the need for “profound structural changes to forms of energy production” in order to meet global energy needs and simultaneously address climate change. The “urgent and growing needs for investments” to address climate change, especially in the most vulnerable countries, was also highlighted.
The communiqué stated that a reinvigoration of development finance is necessary to meet “regional and national investment priorities,” and that the potential for South-South linkages and regional cooperation need to be tapped for this purpose.
This echoes various calls made by the United Nations and its agencies for deepening South-South trade and economic cooperation.
Governance and lending reform of international financial institutions
Regarding the financing package for low-income countries, which the IMF had established in August 2009 to address national urgent financing gaps, the G24 ministers called on the IMF to complete the package and maintain lending at appropriate levels to help countries meet the burden of high food and fuel prices. The Fund’s low-income country package had included components such as interest rate relief on loans for two years (2009-2011) and an augmentation of loan funds. G24 ministers also agreed on the need to “strengthen the capacity of the World Bank to respond to immediate challenges and longer‐term development needs and to continue to implement the agreed reform agenda.”
The controversial selection process for the Managing Director post in the IMF was absent from the communiqué, despite the fact that several members of the G24 had publicly opposed the selection of another European for the post in a manner that was not merit-based or transparent. On correcting the skewed governance framework of the IMF, G24 ministers repeated their previous support for establishing a third chair for sub-Sahara Africa and for increasing the number of executive board chairs held by developing countries in order to increase the voice and representation of the Fund’s poorest members and small and vulnerable states.
Once again, the G24 underscored that changes to the voting shares of IMF country members must increase the votes of developing countries, be proportionate to their “relative positions in the world economy,” and must not come at the expense of other developing countries. The G24 also repeated their support for a “comprehensive review of the IMF quota formula by January 2013 and the completion of the fifteenth General Review of Quotas by January 2014, as agreed by the Board of Governors of the IMF in December 2010” and “called on members to accelerate their efforts in implementing the 2010 IMF quota and governance reforms.”
The G24 group is composed of African,
Asian and Latin American country clusters. There are 9 African countries
For the text of the communiqué please