IFI reform wave hits G20
Australia plans to revamp ‘confusing’ G20 in the wake of a major reorganization of the World Bank and anger over delayed IMF reform
Australia looks to revamp the Group of 20 nations, which oversees global economic governance, in the latest move to reform the way that international institutions operate.
The head of the Australian Treasury told Emerging Markets it planned to streamline the organization that took on the role of steering global economic governance in the wake of the global financial crisis in October 2008 after the fall of Lehman Brothers.
The move comes hard on the heels of the successful implementation of a far-reaching reorganization of the World Bank, which has seen it adopt new targets and plans to cut millions of dollars from its budget, and in the context of long-delayed attempts to reform governance of the IMF.
Martin Parkinson, Secretary to the Australian Treasury, said that since the G20 was born out of the 2008 crash, it was unclear what its modus operandi was now that the worst of the crisis was over. The G20 was born out of adversity. The objective of the G20 has become confused, he told Emerging Markets.
Australia takes over the chairmanship of the G20 next year amid a mixed economic environment with signs of a growth recovery but potential risks to emerging economies as rich country central banks remove their highly accommodative monetary policy.
Parkinson said Australia was looking to streamline the agenda for the groups work programme in 2014, saying that the Financial Stability Board alone, which reports on financial regulation to the G20, has 73 work streams.
He noted that the four key objectives set at the 2009 Pittsburgh summitBasel III; too big to fail, OTC derivatives; and systemic shadow banking riskhad not been implemented.
I dont know how anyone can have that many work streams and be able to prioritize them, he said. How can they all be equally important in achieving the 2009 objectives? Before [the] Brisbane [summit] we want to lock down those things we agreed in 2009.
He said that part of the problem was that too much of the agenda was floating up from the bottom. Standard-setting bodies are determining the agenda. That drags down the finance minister and central bank governors to being bureaucrats, he said.
However Parkinson rejected calls to abolish the G20 saying that asking whether the G20 was legitimate was the wrong question. The question should be is it effective, is it delivering what the world needs? he said.
He said the G20 needed to better communicate what it had achieved in concrete and measurable ways. We may die trying, but if we dont try and build on what Russia has achieved and lay the foundations for Turkey to take it further then Australia will have failed, he said.
Last night the 188 member countries of the World Bank approved the radical reform set out by President Jim Yong Kim that sets target to halve poverty by 2020, eliminate it by 2030 and to monitor inequality.
This will produce concrete results and maximize our development impact, Kim said at the close of the meetings last night. Across our institution, we will make decisions that allow us to be more selective and to choose more transformative projects that help countries and regions reach their priorities.
The IMFs International Monetary and Financial Committee urged all members who had not yet ratified the 2010 reforms of voting rights to give greater powers to emerging economies, to do so without delay. It said it remained committed to completing the 15th General Review of Quotas by January 2014.