Overview of G20
G20 is a forum of the Heads of Governments of the 19 major economies and the EU for global cooperation on international economic and financial issues. The European Union is represented in G20 by the President of the European Council. The forum has come into existence with the first summit of the Leaders of G20 held in Washington D.C. in November 2008 in the wake of global financial crisis. Subsequently, the forum met biannually in 2009 and 2010 and annually since 2011. Frequently organised Leaders’ summits of G20 in 2008, 2009 and 2010 resulted in a momentum of its influence because of significant decisions that were taken to avert the impact of Global financial crisis of 2008.
Through consultations and cooperation, the forum played a major role as a crisis manager and successfully contributed in averting further serious consequences of the global financial crisis. Some major decisions in these regards are worth mentioning. In November 2008, the G20 Leaders agreed to regulate the hedge-funds and the rating companies, and sought to strengthen standards for accounting and derivatives. In April 2009, the Leaders pledged $1 trillion to the IMF and the World Bank to help emerging market countries to offset the effects of recession. In September 2009, the Leaders established a Financial Stability Board to implement financial reforms. Also they took decisions to regulate tax heavens, and more than deserving executive pay increase in the banks and financial institutions. In June 2010, the Leaders agreed to cut their budget deficits to half by 2013 and to eliminate deficits altogether three years later. In November 2010, the G20 Leaders agreed to bring Development agenda under the G20 discussions.
G20 is now perceived as a global decision making forum for contextual critical global issues that are important for achieving sustainable growth and maintaining stability. G20 is working towards strengthening the financial system and fostering financial inclusion to promote economic growth, improving the international financial architecture in an interconnected world, enhancing food security and addressing commodity price volatility; and to promote sustainable development, green growth and the fight against climate change. The key challenge for the G20 at the current juncture is to ensure that international policy cooperation is sustained and enhanced in a coordinated manner to be coherent and consistent with the business cycles. G20 also aims to foster and adopt internationally recognized standards through the example set by its members in areas such as the transparency of fiscal policy and combating money laundering and the financing of terrorism.
Over the last few years of its existence, G20 has developed a system and process of working. G20 does not have any permanent Secretariat. The Presidency is held on rotation by the member countries. The presidency in year 2013 was held by Russia. The current G20 presidency in 2014 is held by Australia. In the next year in 2015, Turkey will host the G20 Presidency. These three countries, therefore, constitute what is known as “Troika” in G20 that represents previous Chair, current chair and the future chair.”
There are broadly two channels through which discussions are held and recommendations are arrived at: (i) The Finance Channel and (ii) Sherpa’s Channel. The finance Channel comprises of the Finance Ministers and Central Bank Governors and their Deputies. In the Sherpas channel, every member country of G20 has nominated a Sherpa to lead the Development agenda discussions. The Sherpas have been tasked by their Leaders to negotiate the Summits documents on their behalf. Thus, Leaders’ Declarations are finalised by Sherpas.
The Presidency of the G20 invites non-member countries and institutions to attend Leaders' summit. Invitation to non-member countries is not guided by any formal rule. There is some informal understanding on this. The number of invited non-member countries normally does not exceed five. Invitation is extended to give a fair and balanced geographical representation to non-members. Countries presiding over regional forums, such as the African Union, ASEAN, APEC, etc., are invited. So far Spain has always been invited in all the meetings. In the Seoul summit, it was formalized that among the five non-member invitees at least two must be from African countries. Invitees attend Leaders’ meetings and take part in the Finance Ministers’ meetings. They are also involved in drafting of Summit decisions, and are invited to take part in the Working Group meetings.
The G20 maintain close association with International Organizations. On the request of G20, these organizations provide expert support and advice as per their respective competence. They provide reports and position papers relating to the Agenda Items. The International Organizations which have been involved are International Monetary Fund (IMF), the World Bank (WB), the Financial Stability Board, the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), the United Nations, UNCTAD and International Labor Organization (ILO). These and other international organizations are also frequently invited to participate in the premier forum and G20 Working Groups meetings.