[Title] Annex II: Multi-year Action Plan on Development

The following sets out our concrete actions and outcomes to be delivered and developed over the medium term. Dates in parentheses denote deadlines to be met. The Development Working Group will continue its work and will monitor progress on the Multi-Year Action Plan by reporting to the Sherpas.

INFRASTRUCTURE

Gaps in infrastructure, including with respect to energy, transport, communications, water and regional infrastructure, are significant bottlenecks to increasing and maintaining growth in many developing countries. We are committed to overcoming obstacles to infrastructure investment, developing project pipelines, improving capacity and facilitating increased finance for infrastructure investment in developing countries, in particular low income countries (LICs).

ACTION 1: DEVELOP COMPREHENSIVE INFRASTRUCTURE ACTION PLANS

We request the regional development banks (RDBs) and the World Bank Group (collectively, multilateral development banks, or MDBs) to work jointly to prepare action plans that increase public, semi-public and private finance and improve implementation of national and regional infrastructure projects, including in energy, transport, communications and water, in developing countries, LICs in particular. The MDBs will pursue actions in the following five areas:

Information and needs assessment

· Identify infrastructure gaps, needs and funding requirements, particularly with respect to regional and rural infrastructure, as well as opportunities to promote public-private and semi-public partnerships (June 2011); and

· Working with developing countries and regional agencies, deliver bankable growth- supporting regional connectivity projects, building on the momentum created by existing initiatives and facilities (e.g., Infrastructure Project Preparation Facility (IPPF), New Partnership for Africa’s Development (NEPAD), African Water Facility (AWF) and Asian Infrastructure Financing Initiative (AIFI)). (November 2011)

Internal practices

· Identify possible improvements in their lending guidelines, internal policies and practices with a view to overcoming bottlenecks that constrain infrastructure lending, disbursements and the speed of project implementation (June 2011); and

· Assess the sufficiency of internal resources for project preparation, institutional capacity development and risk mitigation. (June 2011)

Improving the domestic infrastructure investment climate

· Working with LICs on a demand driven basis, assess and diagnose institutional, regulatory, policy, and public sector capacity bottlenecks in LICs that hamper public, semi-public and private investment in infrastructure and assist LICs in developing action plans within the context of national development goals and strategies to:

(i) remove the bottlenecks to development, whole life costing and planning for investments in new infrastructure, operations and maintenance of existing infrastructure and rehabilitation of aging infrastructure;

(ii) improve internal resource mobilization and increase fiscal space; and

(iii)increase energy access, including by supporting more sustainable paths that make maximum use of cost effective renewable energy and resources, support energy

conservation, and increase efficiency. (November 2011)

Special measures for regional integration

· Identify and make recommendations with respect to specific institutional, regulatory and policy changes needed for national policies and regional architecture to respond to the physical and economic needs of regional projects (November 2011);

· Identify a limited number of regional initiatives with a plan for action to reduce bottlenecks and deliver concrete outcomes in these initiatives (November 2011); and

· Identify MDBs’ institutional bottlenecks that may impede investment in cross-border and regional infrastructure projects. (November 2011)

Transparency and sustainability

· Working with existing pilots, develop an initiative ready for implementation to significantly improve transparency in procurement, construction and infrastructure finance (November 2011); and

· Assess how best to integrate environmental safeguards into infrastructure development in an effective and cost efficient manner. (November 2011)

The final outcomes of these MDB action plans should be reported to the Summit in France and be accompanied by an endorsement and commentary by the HLP (see below). (June 2011 for preliminary report; November 2011 for final report)

We have created a High-Level Panel for Infrastructure Investment (HLP) to mobilize support for scaling up infrastructure financing. The HLP will last for one year, until the Summit in France.

Composition

· Approximately 12 members will be appointed in a non-executive capacity for their expertise and authority in developing country public infrastructure investment needs, public finance and economics, constraints in LICs, sovereign wealth fund investment criteria, public private partnerships, project finance, innovative finance, and risk management (February 2011; December 2010 for appointment of Chair); and

· Administrative and technical support and resources will be provided by a dedicated group of experts from the MDBs and the private sector.

Terms of Reference

The HLP will:

· Review MDB policy frameworks and identify and recommend concrete measures to scale

up finance and diversify the sources of affordable financing for infrastructure needs,

including from public, semi-public and private sector sources;

· Take into account the limitations of risk bearing capacity of private and semi-public

finance, lessons of successes and failures from the past and ongoing programs, best practice, the importance of durability and whole life costing, and innovative ways to mitigate and intermediate risks to attract finance; and

· Review the MDB Action Plan and provide independent comment in an iterative process to ensure workability, the maximization of the outcomes and a focus on environmental sustainability and transparency.

· The final outcomes of the HLP should be reported to the Finance Ministers meeting and to the Leaders at the Summit in France. (June 2011 for preliminary report; November 2011 for final report)

HUMAN RESOURCE DEVELOPMENT

Developing human capital is a critical component of any country’s growth and poverty reduction strategy. Adding to education initiatives related to the Millennium Development Goals (MDGs), it is important for developing countries, in particular LICs, to continue to develop employment- related skills that are better matched to employer and market needs in order to attract investment and decent jobs.

ACTION 1: CREATE INTERNATIONALLY COMPARABLE SKILLS INDICATORS

We call upon the World Bank, ILO, OECD, and UNESCO to work together to develop internationally comparable and practical indicators of skills for employment and productivity in developing countries, particularly LICs, to assist them to:

· Better match training to employers’ needs and future labor market opportunities in developing countries;

· Identify gaps in the education system for basic level employable skills;

· Identify the links between education, health problems, gender gaps and life-long skills

development; and

· Produce a comparable database across countries to serve as a monitoring tool for assessing

employable skills development in LICs.

The relevant institutions will submit an interim report at the Summit in France, a final report on the skills indicators by 2012, and a final report on the comparable database by late 2014. (2012; late 2014)

ACTION 2: ENHANCE NATIONAL EMPLOYABLE SKILLS STRATEGIES

The MDBs, ILO, OECD and UNESCO have agreed today to form a unified and coordinated team with the aim of supporting a pilot group of self-selected LICs to enhance their national strategies to develop skills, improve productivity in existing jobs, and promote investment in new jobs. This action should:

· Focus on strengthening national and regional vocational education and training institutions and programs;

· Build on the G20 Training Strategy submitted at the Toronto Summit and begin by identifying existing gaps that act as barriers to increasing investment in skills development and productivity, including through considering the impact of gender gaps and health problems such as non-communicable diseases; and

· Review the work done and, based on the results achieved, consider a wider roll-out of the program to LICs and middle income countries.

(2012)

TRADE

No country has grown and reduced poverty without access to and the ability to trade. Recognizing both the capacity and access to trade as key elements in economic growth and poverty reduction, we are committed to facilitating trade with and between developing countries, in particular LICs.

ACTION: ENHANCE TRADE CAPACITY AND ACCESS TO MARKETS

· We agree to make progress towards duty-free and quota-free (DFQF) market access for the least developed country (LDC) products in line with Hong Kong commitments without prejudice to other negotiations, including as regards preferential rules of origin. We will explore, in collaboration with the relevant international organizations, the scope for further improvement and cooperation among G20 members leading to the implementation of this commitment.

· We are committed to at least maintaining, beyond 2011, Aid for Trade levels that reflect the average of the last three years (2006 to 2008). We are also resolved to strengthen the role of South-South trade cooperation and to reinforce the involvement of the private sector in these measures. In parallel with the implementation of these commitments, we will ensure that aid flows to other sectors are sustained. (2011 and beyond)

· We will engage fully in the ongoing processes of relevant institutions, in particular the WTO, OECD, World Bank and other multilateral and regional development bodies, to monitor these commitments and evaluate their impact on LICs' capacity to trade. We will consider the outcome of the Global Aid for Trade Review of July 2011 and adjust our Multi-Year Action Plan on Development accordingly. (2011)

· To follow up on the Toronto Declaration, which asks international agencies, including the World Bank and other MDBs, to step up their capacity and support trade facilitation, we call on such institutions to coordinate a collective multilateral agency response by the time of the Global Aid for Trade Review in 2011. (July 2011)

· We ask the G20 Trade Finance Expert Group, together with the WTO Experts Group on Trade Finance and OECD Export Credit Group to further assess the current need for trade finance in LICs and, if a gap is identified, will develop and support measures to increase the availability of trade finance in LICs. We call on the WTO to review the effectiveness of existing trade finance programs for LICs and to report on actions and recommendations for consideration by the Sherpas through the G20 Development Working Group in February 2011. (February 2011)

· In order to develop practical measures that can be pursued nationally and regionally to support successful regional trade integration, in particular between African countries, we ask the African Development Bank, in collaboration with the WTO and MDBs, to identify before the Summit in France the existing obstacles and barriers to regional trade integration in Africa. (June 2011)

PRIVATE INVESTMENT AND JOB CREATION

Domestic and foreign private investment are key sources of employment, wealth creation and innovation, which in turn contribute to sustainable development and poverty reduction in developing countries. The decisions and actions in this area are primarily those of investors themselves and those of developing countries in improving the policy environment for investment. Recognizing the centrality of private investment to development and job creation, we will support and assist investors, developing countries and key development partners, such as the International Finance Corporation and International Development Association, in their work to better leverage and maximize the economic value-added of private investment and to create globally competitive industries. We will work with successful existing initiatives such as the UN Global Compact, the Investment Climate Facility for Africa, the World Bank’s Annual Doing Business Report and indicators, and the MDG Call to Action.

ACTION: SUPPORT RESPONSIBLE VALUE-ADDING PRIVATE INVESTMENT AND JOB CREATION

· We will identify, enhance as needed, and promote the best existing standards (developmental, social and environmental) for responsible investment in value chains and voluntary investor compliance with these standards. (June 2011)

· We request UNCTAD, UNDP, ILO, OECD and the World Bank to review and, consistent with best practice of responsible investment, develop key quantifiable economic and financial indicators for measuring and maximizing economic value-added and job creation arising from private sector investment in value chains. Based on these indicators, these international organizations should make recommendations to assist developing countries to attract and negotiate the most value-adding investment to their economies. (June 2011; Summer 2012)

· We request the World Bank and relevant agencies, in association with the G20, to establish a G20 Challenge on Innovation to provide a platform for innovative solutions to be brought to scale and to showcase entrepreneurship aimed at solving social challenges (e.g. innovative services on business strategies focusing on youth unemployment). (November 2011)

Based on the outcome, we will recommend how to engage the private sector to find innovative business solutions that meet the needs of the poor in a sustainable way. (Summer 2012)

· The G20, MDBs, UNCTAD, UNDP, ILP and OECD will, based on the outcomes of this and other work, assist developing countries, in particular LICs, to develop action plans with the view to strengthen financial markets to boost small and medium enterprises (SMEs), improve the business investment climate, maximize the value-added of private investment and support the regulatory framework for foreign and domestic investment. Existing international investment arrangements between G20 countries and LICs will be strengthened to promote investment in LICs. (June 2012)

FOOD SECURITY

We emphasize the need for increased investment and financial support for agricultural development and welcome commitments made through the Global Agriculture and Food Security Program (GAFSP) and other bilateral and multilateral channels. We encourage additional contributions by the private sector, the G20 and non-G20 actors to support country-led plans and ensure predictable financing. We endorse the Rome Principles for enhancing global policy coherence and mitigating risks to sustainable agricultural productivity, access to food, nutrition and crisis prevention.

ACTION 1: ENHANCE POLICY COHERENCE AND COORDINATION

· In order to strengthen existing agriculture research systems we request the FAO and the World Bank to examine and recommend potential innovative results-based mechanisms, such as those examined by the Consultative Group on International Agricultural Research (CGIAR) and advanced market commitments for enhanced agricultural productivity. (March 2011)

· We underline the need to fulfill our existing commitments on food security and sustainable agricultural development. We will review and monitor progress on G20 commitments and request the FAO, World Bank and OECD, in cooperation with the l’Aquila Food Security Initiative (AFSI), to monitor progress and report back at the Summit in France. (March 2011 for preliminary report; June 2011 for final report)

· We call for support to build capacity in tropical agriculture technologies and productive systems. (Medium-term)

ACTION 2: MITIGATE RISK IN PRICE VOLATILITY AND ENHANCE PROTECTION FOR THE MOST VULNERABLE

· We request key international organizations, including the UN Committee on World Food Security (CFS), to identify bottlenecks and opportunities to increase policy coherence for food security consistent with the Rome Principles. The work should focus on harnessing the potential of the agriculture sector to advance sustainable economic growth and poverty reduction, enhance engagement with the private sector and strengthen North-South, South- South and triangular cooperation. (March 2011 for preliminary report; June 2011 for final report)

· We request that FAO, IFAD, IMF, OECD, UNCTAD, WFP, the World Bank and WTO work with key stakeholders to develop options for G20 consideration on how to better mitigate and manage the risks associated with the price volatility of food and other agriculture commodities without distorting market behavior, ultimately to protect the most vulnerable. We ask the World Bank to work with other relevant international agencies to develop measures to improve information on national and regional food stocks and food production projections, provide nutrition intervention for the most vulnerable, and ensure access to humanitarian supplies. (March 2011 for preliminary report; June 2011 for final report)

· We are committed to promoting increased procurement from smallholder producers and to strengthen their access to markets, in line with domestic and regional strategies. (Medium- term)

· We encourage all countries and companies to uphold the principles of Responsible Agricultural Investment. We request UNCTAD, the World Bank, IFAD, FAO and other appropriate international organizations to develop options for promoting responsible investment in agriculture. (March 2011 for preliminary report; June 2011 for final report)

GROWTH WITH RESILIENCE

Social protection systems and international remittances, together with improved access to financial services, play an important role in providing income security for poor communities in developing countries, and in particular LICs, providing buffers to those communities from the impact of external shocks and contributing to the maintenance and enhancement of aggregate demand. Lessons can be learned from the performance of specific social protection mechanisms in developing countries during the recent crisis, and applied for the benefit of LICs, including through South-South cooperation. Measures can also be taken to facilitate and increase the efficiency of international remittances, building on existing work in this area.

ACTION 1: SUPPORT DEVELOPING COUNTRIES TO STRENGTHEN AND ENHANCE SOCIAL PROTECTION PROGRAMS

Recognizing the vulnerabilities exposed by the global financial crisis, we call upon the UNDP, in consultation with the ILO, MDBs and other relevant international organizations, to:

· Identify lessons learned from the implementation of social protection mechanisms in developing countries, in particular LICs, during and after the crisis;

· Prepare best practice guidelines based on this experience; and

· Make recommendations on how to surmount barriers inhibiting cross-country knowledge

sharing and program replication or expansion.

The primary focus of this work will be on social protection mechanisms that support resilient

and inclusive growth by helping vulnerable communities to deal with external shocks. It should consider options for improving the timeliness and accuracy of poverty data, including through further implementation of the UN Global Pulse Initiative.

The outcomes of this work, and of any relevant programs being taken forward by G20 members under North-South, South-South or triangular cooperation arrangements, will be reported to the Summit in France. (March 2011 for preliminary report; June 2011 for final report)

ACTION 2: FACILITATE THE FLOW OF INTERNATIONAL REMITTANCES

We recognize the importance of facilitating international remittance flows and enhancing their efficiency to increase their contribution to growth with resilience and poverty reduction. We ask the World Bank, RDBs and other relevant organizations, including the Global Remittances Working Group, to work with individual G20 members and non-G20 members in order to progress further the implementation of the General Principles for International Remittance Services and related international initiatives aimed at a quantified reduction of the global average cost of transferring remittances. The outcomes of this work will be reported to the Summit in France. (November 2011)

FINANCIAL INCLUSION

Given that more than two billion adults are excluded from financial services and millions of micro-, small- and medium- sized enterprises (MSMEs) face serious constraints in accessing finance, financial inclusion is fundamental for improving the livelihoods of the poor and in supporting MSMEs, and work as the engines of economic growth and job creation.

ACTION 1: ESTABLISH THE GLOBAL PARTNERSHIP FOR FINANCIAL INCLUSION

We will launch the Global Partnership for Financial Inclusion (GPFI) to provide a systematic structure for implementing the G20 Financial Inclusion Action Plan in close collaboration with the Alliance for Financial Inclusion (AFI), the Consultative Group to Assist the Poor (CGAP), and the International Finance Corporation (IFC). (November 2010)

The GPFI will (i) facilitate an efficient and effective information sharing mechanism; (ii) coordinate the various financial inclusion efforts (iii) provide systematic monitoring of progress over time (iv) mobilize financial support for activities as needed, and (v) launch and coordinate taskforces to address specific financial inclusion issues (e.g. financial inclusion data). The GPFI will coordinate its work with the APEC initiative and other financial inclusion initiatives.

The progress and annual report of the GPFI will be submitted to the Summit in France.

ACTION 2: SME FINANCE CHALLENGE AND FINANCE FRAMEWORK FOR FINANCIAL INCLUSION

SME Finance Challenge

We will announce the 14 winning proposals of the SME Finance Challenge that offer innovative models for catalyzing private capital for SME finance. (November 2010)

Finance Framework for Financial Inclusion

We commit to establishing a finance framework that mobilizes grant and risk capital for winning proposals from the SME Finance Challenge and for scaling up successful SME financing models. The framework will use existing funding mechanisms and the SME Finance Innovation Fund, a newly created multilateral trust fund.

ACTION 3: IMPLEMENT THE ACTION PLAN FOR FINANCIAL INCLUSION

We will adopt the G20 Financial Inclusion Action Plan to promote the application of the Principles for Innovative Financial Inclusion (the Principles) and the lessons learned from the SME stocktaking exercise. (November 2010)

The actions to be implemented include (i) advancing the implementation of the Principles through a commitment by each G20 member to implement at least one of the Principles; (ii) encourage the Standard Setting Bodies to further incorporate financial inclusion objectives into their work; (iii) encouraging further private sector activities to increase access to financial services; (iv) strengthening and expanding data availability for measuring financial inclusion and methodologies for countries that wish to set financial inclusion targets; (v) supporting peer- learning capacity building and training; (vi) improving coordination at the national and international levels; and (vii) integrating financial inclusion into financial assessment programs.

The GPFI will submit a progress report on implementation at the next Summit in France (November 2011).

DOMESTIC RESOURCE MOBILIZATION

It is essential to continue to strengthen tax regimes and fiscal policies in developing countries to provide a sustainable revenue base for inclusive growth and social equity, as well as to enhance the transparency and accountability of public finances.

ACTION 1: SUPPORT THE DEVELOPMENT OF MORE EFFECTIVE TAX SYSTEMS

We ask the expanded OECD Task Force on Tax and Development, UN, IMF, World Bank and regional organizations such as the Inter-American Center for Tax Administration and African Tax Administration Forum and other relevant organizations to:

· Identify key capacity constraints faced by developing countries in their tax systems and make recommendations on capacity building to (i) improve efficiency and transparency of tax administrations and (ii) strengthen tax policies to broaden the tax base and combat tax avoidance and evasion (June 2011);

· Develop a knowledge management platform and promote South-South cooperation to support the capacity of developing countries in tax policy and administration systems (Medium-term);

· Survey and disseminate all G20 and international organizations’ actions on supporting tax systems in developing countries (June 2011);

· Set up objective measures to track progress in the capacity improvement of LICs’ tax administration systems (June 2011); and

· Identify ways to help developing countries’ tax multinational enterprises (MNEs) through effective transfer pricing. (June 2011)

The results will be reported at the Summit in France. (November 2011)

ACTION 2: SUPPORT WORK TO PREVENT EROSION OF DOMESTIC TAX REVENUES

We ask the Global Forum to enhance its work to counter the erosion of developing countries’ tax bases and, in particular, to highlight in its report the relationship between the work on non- cooperative jurisdiction and development. (Medium-term)

The results will be reported at the Summit in France. (November 2011)

KNOWLEDGE SHARING

Sharing development experiences, including through North-South, South-South and triangular cooperation, contributes to the adoption and adaptation of the most relevant and effective development solutions. We encourage international organizations such as the UN, World Bank, OECD and RDBs that operate knowledge sharing platforms to strengthen and broaden sources of knowledge on growth and development. We agree that knowledge sharing initiatives should be mainstreamed in each pillar in this Multi-Year Action Plan.

ACTION: ENHANCE THE EFFECTIVENESS AND REACH OF KNOWLEDGE SHARING

We request the Task Team on South-South Cooperation (TT-SSC) and UNDP to recommend how knowledge sharing activity, including North-South, South-South, and triangular cooperation, can be scaled up. These recommendations should include measures to broaden knowledge sources, improve brokering functions, strengthen the dissemination of best practices and expand funding options. (June 2011)