G-20 Makes Promises That Shouldn’t be Broken

G-20 finance ministers and central bankers vowed at the close of their meeting on March 14 to do whatever it takes to pull the global economy through the crisis but how exactly they plan to do so is the world's question.At the top of menu is boosting demand and jobs through fiscal stimulus plans. To complement fiscal expansion are aggressive cuts in interest rates, which G-20 central banks pledged to maintain as long as necessary.A key concern is ensuring liquidity especially for developing economies. The G-20 officials agreed to increase the resources of the International Monetary Fund and ensure capital increase for the likes of the Asian Development Bank.The New York Times suggested a trans-Atlantic rift exists between countries promoting substantial government stimulus to restore demand such as the U.S. and European countries that are cautious against going into deficit spending and prefer regulatory reform.U.S. President Barack Obama downplayed such insinuations, insisting it was a "phony debate" because there were no sides, the Financial Times reported.But Germany and France spoke of their preference for focusing on reform at the main G-20 meeting in April.Robert Zoellick, president of the World Bank, indicated taking sides is irrelevant because both stimulating economies and mopping up toxic assets are necessary."If you don't take on the banking issue, the stimulus is just like a sugar high," he said.Although the outcome of the meeting may have lacked precise plans, the significance of the commitments made cannot be underestimated. Reuters pointed out the value of G-20 as a process from which decision-makers take away propositions back to their country and think about them.For now, maybe promises would suffice. But the world will want them delivered on eventually.

About the author

  • Josefa Cagoco

    Sef Cagoco served as one of Devex's international development correspondent from mid-2008 to mid-2009. Her writing focused on social entrepreneurship and multilateral agencies such as the U.N. and Asian Development Bank. She previously worked as senior reporter for the national daily BusinessWorld and a production journalist for the Financial Times.