"The World and Japan" Database (Project Leader: TANAKA Akihiko)
Database of Japanese Politics and International Relations
National Graduate Institute for Policy Studies (GRIPS); Institute for Advanced Studies on Asia (IASA), The University of Tokyo

[Title] Communiqué, G20 Finance Ministers & Central Bank Governors Meeting

[Date] July 18, 2020
[Source] Ministry of Foreign Affair of Japan
[Full text]

1. Global economic activity is expected to contract sharply in 2020 due to the impact of the COVID-19 pandemic and the associated disruptions in supply and demand. While the outlook remains highly uncertain and is subject to elevated downside risks, global economic activity is expected to recover going forward as our economies gradually reopen and the impacts of our significant policy actions materialize. We are determined to continue to use all available policy tools to safeguard people's lives, jobs and incomes, support global economic recovery, and enhance the resilience of the financial system, while safeguarding against downside risks.

2. We are taking immediate and exceptional measures to address the COVID-19 pandemic and its intertwined health, social and economic impacts, including through the implementation of unprecedented fiscal, monetary and financial stability actions while ensuring that the International Financial Institutions (IFIs) and relevant international organizations can provide critical support to emerging, developing and low-income countries. The global landscape continues to be rapidly transformed by economic, social, environmental, technological and demographic changes. Working together, we will continue, and strengthen as necessary, these efforts to support a fast and robust recovery to achieve strong, sustainable, balanced, and inclusive growth, while making the most of current transformations in shaping the recovery, in a way consistent with our pre-crisis agenda. Fiscal and monetary policies will continue operating in a complementary way for as long as required. Monetary policy continues to support economic activity and ensure price stability, consistent with central banks' mandates. We will continue to facilitate international trade, investment and to build resilience of supply chains to support growth, productivity, innovation, job creation and development. We will continue to take joint action to strengthen international cooperation and frameworks.

3. The G20 Action Plan, endorsed at our meeting on 15 April 2020, sets out the key principles guiding our response and commitments to specific actions to drive forward international economic cooperation as we navigate this crisis and look ahead to a robust, sustained and inclusive global economic recovery. We have made substantive progress in implementing the G20 Action Plan and we endorse the first G20 Action Plan Progress Report (Annex I), which provides information on monitoring Action Plan commitments, including the progress made and the way forward to support the global economic recovery, while enhancing resilience against future shocks, including pandemics, natural disasters and environmental risks.

4. We reiterate our agreement that the G20 Action Plan is a living document that will allow us to respond promptly to the evolving health and economic situation. Recognizing that members are in different stages of responding to the crisis and that the global economic outlook continues to evolve, further steps are needed. In particular, the third pillar of the G20 ActionPlan - returning to strong, sustainable, balanced, and inclusive growth once containment measures are lifted – provides the basis to cooperate in support of the global economic recovery. Building on our previous commitments and taking into account discussions at the upcoming joint meeting of G20 Finance and Health Ministers, we task the relevant working groups to develop an updated G20 Action Plan that will be presented to our meeting in October 2020 ahead of the G20 Leaders' Summit in November 2020. We reaffirm our commitment to regularly review, update, track implementation, and report on the G20 Action Plan.

5. The COVID-19 pandemic has reinforced the need to enhance access to opportunities for all. We will continue our efforts to reduce inequalities, reaffirming our previous commitments to promote inclusive growth. We will also continue to address the disproportionate impact of the crisis on the most vulnerable segments of society. In this context, we endorse the G20 Menu of Policy Options to Enhance Access to Opportunities for All as a valuable set of policy options that can be leveraged to support the immediate response to the COVID-19 pandemic and move towards a strong, sustainable, balanced and inclusive recovery.

6. We welcome the progress achieved under the Debt Service Suspension Initiative (DSSI). As of 18 July 2020, 42 countries have requested to benefit from the DSSI, amounting to an estimated USD 5.3 billion of 2020 debt service to be deferred. The International Monetary Fund (IMF) and the World Bank Group (WBG) have proposed a fiscal monitoring framework and a process to strengthen the quality and consistency of debt data and improve debt disclosure. To provide maximum support to DSSI-eligible countries, we will continue to closely coordinate in its implementation. All official bilateral creditors should implement this initiative fully and in a transparent manner. While protecting their current ratings and low cost of funding, Multilateral Development Banks (MDBs) are encouraged to go further on their collective efforts in supporting the DSSI, including through providing DSSI-eligible countries with net positive financial flows over the suspension period of the DSSI, and further details on the new money provided to each eligible country. We take note of the Institute of International Finance (IIF) Terms of Reference for Voluntary Private Sector Participation. We note the need for further progress and strongly encourage private creditors to participate in the DSSI on comparable terms when requested by eligible countries. We will consider a possible extension of the DSSI in the second half of 2020, taking into account the development of the COVID-19 pandemic situation and the findings of a report from the IMF and WBG on the liquidity needs of eligible countries, which will be submitted to the G20 in advance of our meeting in October 2020. We also look forward to an update on the implementation of IIF's Voluntary Principles for Debt Transparency, including on work to identify a data repository.

7. We remain determined to act swiftly, individually and collectively, including through IFIs, to safeguard financial stability against short-term risks while strengthening long-term financial resilience and supporting growth, including through promoting sustainable capital flows and developing domestic capital markets. We welcome the High-Level Ministerial Conference held by the G20 and Paris Forum on 8 July 2020 "Tackling the COVID-19 Crisis – Restoring Sustainable Flows of Capital and Robust Financing for Development", whose discussions help inform the work on these issues.

8. We reiterate our commitment to ensure a stronger global financial safety net with a strong, quota-based, and adequately resourced IMF at its center, and will keep demands on the IMF resources under close review. We welcome the actions taken by the IMF in response to the crisis. We welcome the immediate financial contributions pledged to strengthen the IMF's crisis response capacity to address the critical funding needs of low-income countries and call for more and urgent contributions. We also call on the IMF to explore additional tools that could serve its members' needs as the crisis evolves, drawing on relevant experiences from previous crises.

9. Infrastructure is a driver of growth and prosperity, is critical to promoting economic recovery and resilience, and can be further enhanced through the use of technology. We endorse the G20 Riyadh InfraTech Agenda, which promotes the use of technology in infrastructure, with the aim of improving investment decisions over the lifecycle, enhancing value for money of infrastructure projects, and promoting quality infrastructure investments for the delivery of better social, economic and environmental outcomes. In line with the G20 Roadmap for Infrastructure as an Asset Class, we welcome the G20/OECD Report on the Collaboration with Institutional Investors and Asset Managers on Infrastructure Investment, which reflects investors' view on issues and challenges affecting private investment in infrastructure and presents policy options to address them. We look forward to continuing this work through a structured collaboration in a flexible manner, with the participation of interested MDBs and International Organizations (IOs). We welcome the progress made so far and will advance the work related to the G20 Principles for Quality Infrastructure Investment, including through the member-led case study survey and the continued exploration of possible indicators. We recognize the need to better inform infrastructure investment decisions through the ongoing work on access to data.

10.We will continue our cooperation for a globally fair, sustainable, and modern international tax system. We acknowledge that the COVID-19 pandemic has impacted the work of addressing the tax challenges arising from the digitalization of the economy. We stress the importance of the G20/OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) to continue advancing the work on a global and consensus-based solution with a report on the blueprints for each pillar to be submitted to our next meeting in October 2020. We remain committed to further progress on both pillars to overcome remaining differences and reaffirm our commitment to reach a global and consensus-based solution this year. We welcome the progress made on implementing the internationally agreed tax transparency standards and the progress made on the established automatic exchange of information, as well as its advancement, marked by the agreement on the model reporting rules for digital platforms for interested countries. We welcome the annual BEPS Progress Report of the G20/OECD Inclusive Framework on BEPS. We also welcome the Progress Report of the Platform for Collaboration on Tax and continue our support to developing countries in strengthening their tax capacity to build sustainable tax revenue bases.

11.We reiterate our commitment to the five principles set out in the Financial Stability Board (FSB)'s report on COVID-19 to the G20 in April 2020, which underpin national and international responses to the COVID- 19 pandemic. We welcome that these responses have been largely in line with, and have reconfirmed commitment to, international standards. We welcome the FSB's update on COVID-19, highlighting financial stability implications and policy measures taken. We ask the FSB to continue monitoring financial sector vulnerabilities, including those related to liquidity, solvency, and pro-cyclicality, with special attention to the situation of non-financial corporates, and coordinating and communicating clearly on regulatory and supervisory measures among its member jurisdictions, IOs and Standard-Setting Bodies (SSBs). We support using the existing flexibility within international regulatory standards, including on the use of capital and liquidity buffers, without compromising on the previously agreed reforms. We will continue to consider how to safeguard the banking sector's loss absorbency and lending capacity, including through our approaches regarding constraints on dividends and share buybacks, taking into account country circumstances. We welcome the FSB plan to carry out, by November 2020, a holistic review of the market conditions that prevailed during March 2020, including the implications by the non-bank financial intermediation (NBFI) sector, drawing on the work by the SSBs. We welcome the public consultation report on the FSB's evaluation of the effects of Too-Big-To-Fail reforms, which highlights the significant benefits of these reforms and the need for further work to address remaining obstacles to resolvability. Mobilizing sustainable finance and strengthening financial inclusion are important for global growth and stability. The FSB is continuing to examine the financial stability implications of climate change. We welcome growing private sector participation and transparency in these areas.

12. The impact of COVID-19 has highlighted that the underlying markets that LIBOR seeks to measure are no longer sufficiently active. We reaffirm the importance of the end-2021 deadline for the transition away from LIBOR. We welcome the FSB's assessment of the level of readiness among market participants and authorities, including its recommendations for addressing remaining challenges and supporting the global transition from LIBOR. We ask the FSB, in collaboration with relevant IOs and SSBs, to continue to monitor LIBOR exposures, transition status and progress in implementing the recommendations in its July 2020 Report to the G20.

13. The pandemic has reaffirmed the need to enhance global cross-border payment arrangements to facilitate lower-cost, faster, more accessible and more transparent payment transactions, including for remittances. We welcome the Committee on Payments and Market Infrastructures (CPMI)'s stage two report, which sets out a comprehensive set of "building blocks" to enhance cross-border payment arrangements by addressing long standing frictions. We look forward to the G20 roadmap to enhance global cross-border payment arrangements to be delivered by the FSB, in coordination with IOs and SSBs, by our meeting in October 2020, which will include practical steps and indicative timeframes needed.

14. To harness the opportunities from digital technologies to advance financial inclusion, we endorse the G20 High-level Policy Guidelines on Digital Financial Inclusion for Youth, Women, and SMEs prepared by the Global Partnership for Financial Inclusion (GPFI). We welcome the steps taken by the GPFI to complete the final streamlining activities outlined in the "GPFI Work Program and Structure: A Roadmap to 2020", including the Financial Inclusion Action Plan and the Terms of Reference update.

15. We support the Anti-money laundering (AML)/Counter-terrorist financing (CFT) policy measures detailed in the Financial Action Task Force (FATF)'s report on COVID-19, and we reaffirm our support for the FATF, as the global standard-setting body for preventing and combating money laundering, terrorist financing and proliferation financing. We reiterate our strong commitment to tackle all sources, techniques and channels of these threats. We reaffirm our commitment to strengthening the FATF's global network of regional bodies, including by supporting their expertise in mutual evaluations, and call for the full, effective and swift implementation of the FATF standards worldwide. We ask the FATF to remain vigilant with respect to emerging financial technologies that may allow for new methods of illicit financing and commend its enhanced focus on those technologies' potential to support AML and CFT efforts.

16. We emphasize our ongoing support for the G20 Compact with Africa (CwA) initiative and underline the importance of enhanced cooperation between all partners, particularly in these challenging times.