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Logo of the 2018 Buenos Aires Summit

Buenos Aires Action Plan

November 2018
[PDF in English]

1. Overview and Global Economic Context

1. Ten years since the onset of the global financial crisis, the G20 has advanced reforms across a range of policy areas. The results of our efforts have led to a stronger and more resilient global economy and financial system. Our work however is not complete, and the Buenos Aires Action Plan (the Action Plan) sets out our collective strategy for achieving strong, sustainable, balanced and inclusive growth.

2. The global economic outlook remains strong, and unemployment is at a decade low. However, growth is showing signs of moderation and has become less synchronised between countries, and downside risks have increased. To help fulfil our goal of securing strong, sustainable, balanced and inclusive growth, we will continue using all policy tools at our disposal — monetary, fiscal and structural — individually and collectively, and recognise the importance of timely and clear communication.

3. This Action Plan outlines our policy responses to risks to the global economic outlook, including actions to support the international financial architecture and a resilient financial system. The Action Plan also highlights our policy actions to help ensure the benefits of growth are shared by all, which are key to achieving fair and sustainable development. The Action Plan includes new measures to harness the benefits of technology for the future of work, while tackling issues relevant to gender equality, infrastructure for development, international taxation, sustainable finance and financial inclusion. Finally, the Action Plan provides a final update on the G20 collective growth ambition agreed in 2014.

2. Responding Proactively to Global Risks

4. Over the short and medium term, downside risks have built up and some have partially materialised. These include risks from rising financial vulnerabilities, geopolitical tensions, global imbalances, inequality and structurally weak growth in some economies. We note current trade issues. We will continue to monitor risks, take action to mitigate them and respond as appropriate. We have also furthered our collective efforts to implement the agreed financial sector reform agenda, assess vulnerabilities and strengthen the international financial architecture.

Financial vulnerabilities

5. Financial conditions have been tightening in many emerging market economies as monetary policy continues to normalise in some advanced economies. Although emerging market economies are now better prepared to adjust to changing external conditions, a faster than expected tightening of financial conditions could lead to a further slowdown or reversal of capital flows, increase market volatility and put pressure on exchange rates and on debt servicing costs.

6. We are taking measures to mitigate risks to global growth, including:

Challenges to the trading system

7. International trade and investment are important engines of growth, productivity, innovation, job creation and development. We recognize the contribution that the multilateral trading system has made to that end. The system is currently falling short of its objectives and there is room for improvement. We therefore support the necessary reform of the WTO to improve its functioning. We will review progress at our next Summit.

We are working to strengthen the contribution of trade to our economies and taking measures to enhance confidence in international trade and mitigate risks, including:

Global imbalances

8. Excessive external and internal imbalances pose a risk to global economic and financial stability, as sudden adjustments could have disruptive spillover effects. While current account imbalances declined following the global financial crisis, further efforts are required to reduce excessive global imbalances. We will continue to monitor global imbalances and improve our understanding of the roles our policies and international monetary system play and to pursue further action to address this challenge from a structural, macroeconomic and multilateral perspective.

9. We are taking measures to address imbalances, including:

Exchange rates

10. As Finance Ministers and Central Bank Governors agreed in March, strong fundamentals, sound policies and a resilient international monetary system are essential to the stability of exchange rates, contributing to strong and sustainable growth and investment. Flexible exchange rates, where feasible, can serve as a shock absorber. We recognise that excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will refrain from competitive devaluations, and will not target our exchange rates for competitive purposes.

Structurally weak growth

11. Many advanced economies are expected to expand above their potential growth rates both this year and next, and emerging market and developing economies are expected to continue to show robust growth. However, growth prospects are less favourable over the medium- to long-term for many economies. Structural factors affecting growth prospects include an ageing population and persistently low investment and productivity growth. This underscores the importance of our continued efforts to advance structural reforms that lift our growth potential. We look forward to the next report by international organizations on the G20 Enhanced Structural Reform Agenda.

12. We are taking measures to counter structurally weak growth, including:

Financial regulation

13. Since the global financial crisis our actions have significantly improved the resilience of the global financial system. We remain committed to the full, timely and consistent implementation and finalisation of the agreed financial reform agenda and the evaluation of its effects. The evaluations of the effects of reforms on infrastructure finance and incentives to centrally clear OTC derivatives shows that the FSB evaluation framework is working as intended by identifying effects for potential future discussions on delivering adjustments where appropriate, without compromising on the level of resilience.

14. The financial system is stronger but risks keep evolving. While non-bank financing provides welcome diversity to the financial system, we will continue to identify, monitor and address related financial stability risks as appropriate. We look forward to the FSB's continued progress on achieving resilient non-bank financial intermediation.

15. We continue to monitor and take further steps to address causes and consequences of the withdrawal of correspondent banking relationships and help countries deal with them. We call for the comprehensive implementation of the FSB action plan.

16. In order to reap the full benefits of technological innovation, we will continue to monitor the potential risks of crypto-assets and to assess multilateral responses as needed. We acknowledge there is an FATF standards for crypto and other virtual assets with further assistance from FATF. We look forward to IOSCO's work on crypto-asset platforms. We are also committed to enhancing cyber resilience, and ask the FSB to report to the 2019 Summit on progress on its initiative identifying effective tools relating to a financial institution's response to and recovery from a cyber-incident. We welcome the Bali Fintech Agenda.

17. We will continue to monitor and, as necessary, tackle financial vulnerabilities and emerging risks; and, through continued regulatory and supervisory cooperation, address market fragmentation and preserve an open and integrated global financial system.

International financial architecture

18. We reaffirm our commitment to further strengthening the global financial safety net with a strong, quota- based, and adequately resourced IMF at its centre. We are committed to concluding the 15th General Review of Quotas and agreeing on a new quota formula as a basis for a realignment of quota shares to result in increased shares for dynamic economies in line with their relative positions in the world economy and hence likely in the share of emerging market and developing countries as a whole, while protecting the voice and representation of the poorest members by the Spring Meetings and no later than the Annual Meetings of 2019.

19. Cross border capital flows provide substantial benefits for countries but their scale, composition and volatility may pose policy challenges. Sound domestic macroeconomic policies are the first line of defence against these challenges. Macroprudential measures can play a key role in enhancing resilience and mitigating these challenges while in certain circumstances Capital Flow Management (CFM) measures may be appropriate. We continue to deepen our understanding of how CFM measures are assessed under the OECD Code of Liberalisation of Capital Movements (the Code) and the IMF's Institutional View (IV). We look forward to the final results of the review of the OECD Code by our next Summit.

20. We underline the importance of building capacity in public debt and financial management, strengthening domestic policy frameworks and governance, enhancing domestic resource mobilization, and ensuring transparent sound and sustainable financing practices for borrowers and creditors, both official and private. We support the ongoing work of the Paris Club, as the principal international forum for restructuring official bilateral debt, towards broader inclusion of emerging creditors. We welcome the work of the IMF and the World Bank on strengthening public debt transparency and welcome the recommendations. We welcome the G20 Operational Guidelines for Sustainable Financing and call for their follow-up. We look forward to the progress of the IIF work on sustainable financing.

21. We welcome the report of the Eminent Persons Group on Global Financial Governance and look forward to follow up under the Japanese Presidency.

3. Fostering Inclusive Growth

22. Inclusive growth is key for the welfare of our citizens, social cohesion and socioeconomic development, and sustained growth. In recent decades, economic growth has significantly improved living standards around the world and, at the same time, has helped reduce extreme poverty and inequality between countries. Nevertheless, income inequality and poverty levels remain high and more effort is needed. Moreover, there are concerns that the gains from strong growth have not been broadly shared and that inequality within many countries has worsened. Inequality and extreme poverty can hinder actual and potential growth. We are steadfast in our commitment to ensure that growth is inclusive and that the benefits are shared widely amongst our citizens.

23. We are working to better understand the drivers of economic inequality and have taken numerous actions in recent years to promote inclusive growth. We recognise however the need to do more to meet the aspirations of our citizens for shared prosperity. We are therefore taking actions to support inclusive growth, including:

The Future of Work

24. Technology is key to productivity growth and higher living standards, although the diffusion and adoption of technology and innovation can be uneven both within and across countries. We expect the overall long-term impact of technological change to be positive for our economies and living standards, but recognise that the transition period could be disruptive for individuals, firms, and governments and may also entail long term distributional challenges to be addressed.

25. Recognising the potential opportunities and challenges, we have endorsed the G20 Menu of Policy Options for the Future of Work (the Menu) which we will draw on to: harness technology to strengthen growth and productivity; support people during transitions and address distributional challenges; secure sustainable tax systems; and ensure that the best possible evidence informs our decision-making. The Menu also highlights the importance of international cooperation and promoting gender equality.

26. Consistent with the Menu, we are taking a number of new measures to harness the benefits and address the challenges related to the impact of new technologies on the future of work, including:

Infrastructure for Development

27. Infrastructure is important for development. Tackling shortfalls in infrastructure investment will help lift growth, job creation, and productivity. A large global infrastructure gap must be funded in the coming decades in order to keep pace with projected growth. Public sector resources alone remain insufficient to fulfil long-term infrastructure financing needs and international finance institutions' balance sheets are limited. Thus, significant private sector investment in infrastructure is needed. In 2017, it was estimated that there were approximately US$80 trillion in assets under management by institutional investors, presenting a potential source for significant financing infrastructure, including for emerging market and developing economies

28. In this context, we are taking steps to further catalyse private investment into infrastructure. To achieve this, we endorse the "Roadmap to infrastructure as an Asset Class" (the Roadmap) that will help improve project development; promote greater standardisation; and improve the investment environment for infrastructure.

29. We welcome the progress made this year under the Roadmap and endorse the G20 Principles for the Infrastructure Project Preparation Phase, which will lay the foundation for making projects bankable and help attract additional private capital into infrastructure. We encourage implementation of these principles by both MDBs and governments through their project development operations. We welcome the MDB Infrastructure Cooperation Platform, which strengthens and promotes the MDBs working as a system. In line with this, we welcome the Introductory Guide to MDB Guarantees Products which will help increase investor understanding of financial models that help crowd in more private capital. We welcome further work on infrastructure asset performance data and to explore ways to address infrastructure data gaps.

30. We look forward to continued progress on the Roadmap during the next presidency, particularly in the areas of Quality Infrastructure and Regulatory Frameworks and Capital Markets.

Gender equality

31. Increased participation of women in our economies not only is empowering but will help improve our economic growth prospects. It will also promote more inclusive societies. Despite progress, gender gaps continue to exist in many areas. We are therefore taking measures to support greater gender equality, including:

International Taxation

32. We will continue our work for a globally fair, sustainable and modern international tax system based in particular on tax treaties and transfer pricing rules, and welcome international cooperation to advance pro-growth tax policies. We reinforce our commitment to the implementation of the Base Erosion and Profit Shifting (BEPS) package. We will continue to work together to seek a consensus-based solution to address the impacts of the digitalisation of the economy on the international tax system by 2020 with an update in 2019.

33. We welcome the entry into force of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). We welcome the implementation of the automatic exchange of financial account information in over 80 jurisdictions. We support the first automatic exchange of Country-by-Country Reports (CbCR) between governments which started in June 2018. Jurisdictions that have not yet done so are encouraged to put in place a framework for filing and exchanging CbCR. We ask the OECD to prepare a list by the 2019 Leaders' Summit of the jurisdictions that have not yet sufficiently progressed toward a satisfactory level of implementation of the internationally agreed tax transparency standards. Jurisdictions which do not meet the transparency standards will be listed and defensive measures considered against them.

34. We ask the OECD and the IMF to report to Finance Ministers and Central Bank Governors in 2019 on progress made on tax certainty. We call for the Platform for Collaboration on Tax to develop its work plan on its commitments and provide a progress report in 2019.

Sustainable Finance

35. We recognise that mobilising sustainable finance is important for strong, sustainable, balanced and inclusive growth.

36. We welcome the G20 Sustainable Finance Synthesis Report 2018 which presents voluntary options to support the deployment of sustainable private capital, and their implementation by all interested countries.

Financial Inclusion

37. We recognise the importance of financial inclusion to empower and transform the lives of all our people and support the work of the Global Partnership for Financial Inclusion (GPFI) in this regard. We endorse the G20 Financial Inclusion Policy Guide on Digitisation and Informality which provides voluntary policy recommendations to facilitate digital financial services, taking into account country contexts, and recognise digitisation as a tool to financially include unserved and underserved individuals and MSMEs, especially those in the informal economy. We commend the implementation of the G20 Policy Guide in G20 and non-G20 countries through pilot projects and support the continuity of this initiative. We welcome work by the GPFI on financial inclusion of forcibly displaced persons.

38. We support the collection of gender disaggregated data on financial inclusion both from the demand and the supply side considering, among others, the IMF's Financial Access Survey.

39. We also endorse the GPFI Work Program and Structure: A Roadmap to 2020. We ask the GPFI to ensure it meets the specified timeline to streamline its work program and structure so it continues to support economic growth and financial stability, and reduce inequality.

4. G20's Collective Growth Ambition

40. In 2014, we agreed to use our growth strategies as instruments for facilitating an integrated approach that makes use of all policy tools — monetary, fiscal and structural — individually and collectively to boost global growth. At that time, we put forward significant policy measures that, if implemented in a full and timely fashion, would increase G20 collective GDP by an additional 2 per cent by 2018 (collective growth ambition). We updated our growth strategies in 2015, 2016, 2017 and 2018 with new measures aimed at raising the effectiveness of our original actions and further boosting growth.

41. This process has allowed us to go one step further in terms of the coordination effort initiated in 2009 with the Mutual Assessment Process following the Global Financial Crisis. It also showcased the spillovers from structural reforms, highlighting the benefits from coordinated action. Our efforts have so far led us to achieve more than half of our collective growth ambition. Slower-than-expected implementation means that we will achieve our collective growth ambition later than originally anticipated. Importantly, however, we expect the longer-term impact of the measures members will have implemented as part of the growth strategy exercise will exceed 2 per cent of G20 collective GDP. We will continue to implement the policy actions we have put forward in our growth strategies. The measures contained in this Action Plan will further add to this impact.

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Source: Official website of Argentina's 2018 G20 Presidency

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