Global business leaders have attacked the G20 for short-termism in the setting of its agenda and challenged the group to do a better job of managing the global economy, promoting growth, stimulating trade and investment and reforming the international monetary system.
The G20 must take a longer-term view instead of switching its focus from year to year, so that policy actions are carried through from conception to realization, the B20 group of 23 business organizations from across G20 member nations said in a report issued yesterday at its Cannes summit.
The G20 needs to “improve the consistency and continuity of its actions by developing a transparent, multi-year integrated agenda and by continuing to organize appropriate consultations with relevant stakeholders before making decisions,” it said.
By tabling reforms in no fewer than 46 areas of the economic, financial and business environment – all of which B20 Summit host Laurence Parisot, who is also head of the French association of employers MEDEF, claimed were essential – the B20 in effect challenged G20 political heads to lift their focus beyond the eurozone crisis.
The business group focused strongly on the need for reform of the international monetary system (IMS), an issue at risk of being swept off the table at the Cannes G20 summit because of the eurozone crisis – despite it being a priority of host country France.
Problems such as swings in exchange rates distort competition among countries and risk damaging world trade, Robson de Andrade, head of the Brazilian industry confederation, said yesterday. “We need a better balanced international monetary system to reduce risk,” added Andrade, who heads a B20 working group on IMS.
The B20 also highlighted other major deficiencies with the existing system, including currency misalignments, excess reserve accumulation, volatile short-term capital flows and “the frequency and magnitude of financial crises”. These problems impact individual companies as well as the macro economy, the report added.
“Governments should reduce the uncertainty hampering economic growth by communicating clear objectives, increasing transparency and reinforcing IMF surveillance,” so that problems can be headed off more effectively before they develop into full-blown crises.
The B20 suggested that, with the global economy on the brink of a renewed recession, the need for reform of the G20 had become even more pressing.
“The global economy is at a crossroads,” the group said. “Global growth is decelerating and investor confidence is eroding even as the fiscal and social aftershocks of the 2008-09 financial crisis persist in many countries. Stronger and more coordinated leadership from G20 leaders is necessary to reverse these trends.”
“Since the 2008 financial crisis, the global economic context has changed substantially. Now, the priority for the G20 should be to focus on measures that will spur private sector growth and lead to job creation and a healthier foundation for fiscal sustainability,” the report added.
Beyond these issues, the B20 urged G20 governments to adopt a more vigorous and concerted approach to opening up trade and investment regimes, tackling joblessness, promoting development and food security, tackling food and commodity price volatility, combating corruption as well as spurring innovation.