The Ministers of Finance and the Governors of the Central Banks of the G20 countries gathered for a meeting in Buenos Aires on 20-21 July in a secure, fully sealed off area. The participants discussed some of the priorities established by the current Argentine government in the early days of its presidency, such as digitalisation and its impact on the future of work, financial inclusion, taxation and crypto-currencies.

One of their main priorities was the development of infrastructure as an “asset class”, meaning that infrastructure projects can become a category for financial investment (such as other investment categories like shares or real estate).  The participants endorsed a number of conditions and measures to make infrastructure more bankable and attractive to private and institutional investors, which include project preparation, contractual standardisation and government guarantees that mitigate financial risks. The G20 Infrastructure Working Group, the Global Infrastructure Hub and the Multilateral Development Banks’ Infrastructure Cooperation Platform will continue to work out the G20’s infrastructure “road map”. The well-organised Business 20 (B20) focussed on promoting infrastructure as an asset class, while a Private Sector Advisory Group will continue to provide input on how to attract private investment. The many concerns of NGOs as expressed in their C20 declaration were ignored by the G20’s approach to infrastructure, which lacks any safeguards to protect the public interest and leads to new public debt as promoted by the public private partnerships (PPPs).

A significant part of the G20 discussions emphasised the role of the global free trade framework for growth. Western countries and China used this issue to try to convince the US to refrain from tariff wars.  Meanwhile, Argentina and the developing countries had preferred more discussions on the increasing financial instabilities in the lead up to the meeting, which had already forced Argentina to borrow US$50 billion from the IMF.

The G20 did acknowledge the general financial volatility as a result of capital withdrawals from developing countries and the huge debt accrued by these same developing countries. But all they came up with was a call for greater transparency and sustainability of the debt and an improved capacity by developing countries to administer their debt. However, no agreement was reached and no urgent action was taken regarding debt-restructuring mechanisms.

There was no mention of the causes of capital outflows from developing countries, which are the consequence of the unwinding of the quantitative easing programmes by Western countries, increased interest rates and the issuance of a high amount of US government bonds. These issues were not addressed and no agreements were reached regarding improved coordination of monetary and macro-prudential policies. The only commitment they made was to “clearly communicate our macro-economic and structural policy measures” and to continue to both monitor and mitigate risks, and respond during crises. The IMF and its updated quota system are expected to function as a global financial safety net. Meanwhile, the lack of progress on a key G20 post-financial-crisis decision, namely that of making risky derivatives markets more transparent (by reducing “over-the-counter” trading), was only mentioned in passing.

The communiqué issued after this meeting revealed that the meetings of the G20 Ministers of Finance and the Governors of the Central Banks have become more of a forum for the exchange of ideas than an opportunity to make decisions and cooperate toward the prevention of future financial crises and financial instability, thereby protecting many of its members from adverse effects. The communiqué also mentioned that “progress” was being made on the automatic exchange of information to prevent tax avoidance and evasion, and on the “voluntary options” to make the private financial sector greener and more sustainable.

Meanwhile, civil society organisations are calling for a change of the current economic model. They also urge deeper financial reforms in order to prevent new financial crises and to more effectively address the issues of tax avoidance and evasion. Furthermore, the C20 working group on financial architecture and its  proposals never received any official attention from the G20 finance ministers and central bank governors, although an Eminent Persons Group is preparing a blueprint for a new financial architecture, without publicity and political debates (see its initial March 2018 proposals). The blueprint will be presented at the next G20 Ministers of Finance meeting in Bali, Indonesia on 11-12 October 2018.

Eurodad’s assessment of this G20 meeting points to disappointing results regarding debt, taxation and infrastructure. This has led Eurodad to conclude that another forum might be more appropriate for tackling the urgent financial issues that include dealing more fairly and in a more cooperative manner with developing countries’ financial and monetary problems.