Global finance chiefs to discuss increasing loans to developing nations

Global finance chiefs will meet in India next week to discuss increasing loans to developing nations from multilateral institutions, reforming the international debt architecture and regulations on cryptocurrency, Indian officials said.

The finance ministers and central bank governors from the Group of 20 (G20) nations will also discuss a multilateral agreement on taxing conglomerates with cross-border operations, while the Russian war in Ukraine was also bound to come up, they said.

The July 17-18 meeting in Gandhinagar, the capital of the western state of Gujarat, will be the third finance chiefs’ meeting under India’s G20 presidency and will set the tone for a leader’s summit in New Delhi in September. The meeting is likely to be attended by most senior treasury officials from G20 member nations, including U.S. Treasury Secretary Janet Yellen, as well as the World Bank’s newly appointed President Ajay Banga and the International Monetary Fund’s Managing Director Kristalina Georgieva.

Senior treasury officials from Russia and China are also expected to attend, according to two Indian officials, who did not want to be named. India will try to keep the focus of member nations on discussing issues of debt and other economic issues, and not push for any consensus on Ukraine war, one Indian official said, declining to be identified.

During the two-day meeting, the group is likely to discuss a “substantial” increase in annual loans to developing countries from multilateral institutions as recommended by an independent panel formed in March, said another Indian official, who also did not want to be named.

The independent panel, headed by economists Lawrence Summers and N.K. Singh, was commissioned by the G20 to propose reforms to multilateral development banks with a focus on increasing funding for sustainable developments goals and climate change, among others. The official also said the group will continue to work towards resolving differences in helping low-income countries manage their debt burdens and free up funding for climate financing.

Countries like Zambia and Ghana have been waiting for big creditors to make progress in providing debt relief under the so called “Common Framework”, which is led by the G20. Global creditors, debtor nations and international financial institutions agreed in April to galvanize the Common Framework – a platform supposed to speed up and simplify the process of getting over-stretched countries back on their feet.

Though Zambia, locked in default for almost three years, struck a deal last month to restructure $6.3 billion in debt owed to governments abroad including China, many challenges remain. The finance ministers and treasury heads will also attempt to bring agreement on the principles of managing cryptocurrencies in their respective geographies.

The first volume of a report and a “guidance note” to develop a globally coordinated framework for regulation and supervision of crypto assets will be discussed in Gandhinagar, India’s Economic Affairs Secretary Ajay Seth said in a video address on Wednesday.

At the first meeting of the finance chiefs in February, the IMF endorsed the Indian government’s position that crypto assets would require global and coordinated regulation, while giving sovereigns option to ban such assets.

The G20 is also expected to discuss the key differences in taxation of large multinational companies under a framework put forward by the organisation for Economic Co-operation and Development (OECD).

The OECD agreed on Wednesday to defer levying taxes on large multinational companies by one year to 2025 until a common framework is in place.