In a joint statement released on Friday following a two-day summit in South Africa, finance chiefs from the Group of 20 countries emphasized the value of central bank independence while promising further cooperation.
The ministers and central bankers emphasized the uncertainty in the global economy brought on by conflict, trade tensions, and frequent extreme weather events in their first statement since last October, one month before U.S. President Donald Trump’s election victory set the stage for his subsequent tariff war.
Following Trump’s frequent criticism of Federal Reserve Chair Jerome Powell for failing to lower interest rates, which has rocked international financial markets, the question of central bank independence has loomed large over the gathering in the beachfront city of Durban, South Africa.
“This motherhood and apple pie communique is significant because it exists at all, but its expansive scope emphasizes the need for comprehensive G20 simplification,” stated Mark Sobel, a former senior Treasury official who currently chairs the Official Monetary and Financial Institutions Forum for the United States.
“It’s a strong and welcome defense of central bank independence that stood out, given President Trump’s misguided attacks on Chair Powell,” added Powell.
Michael Kaplan, acting Under Secretary of the Treasury for International Affairs, represented the US during the two-day meeting that resulted in the communique.
U.S. Treasury Secretary Scott Bessent was absent.
Despite Washington taking over the G20’s rotating leadership in December, Bessent also did not attend the previous meeting of G20 finance chiefs in Cape Town in February.
Per their mandates, central banks are steadfastly dedicated to maintaining price stability and will keep modifying their policies based on evidence.
To accomplish this, central bank independence is essential,” the communiqué stated.
The communique’s outcomes, according to South Africa’s Deputy Finance Minister David Masondo, were “consented to by all members” and focused on “strategic macroeconomic issues.”
They have previously released a summary, or “chair’s statement,” detailing the different perspectives of members when they were unable to agree on a statement.
A White House official stated that Washington was “leaning towards a back-to-basics plan” when it assumed the G20 presidency, without particularly addressing Friday’s statement.
Along with acknowledging “the importance of the World Trade Organization to advance trade issues,” the communiqué also stated that the organization required reform.
Achieving consensus is considered a success, even though G20 communiqués are not legally binding.
After the Asian financial crisis in the late 1990s, the group was established to coordinate financial policies.
During the global financial crisis of 2008, it expanded to include state leaders.
Enoch Godongwana, the finance minister of South Africa, said during the group’s meeting—which also includes China, Russia, Europe, and major emerging economies—that “I take it as a huge success to achieve what we have done in this environment.”
“This is a positive sign going into the year of the U.S. presidency,” said Josh Lipsky, chair of international economics at the Atlantic Council, in reference to the G20’s announcement. It exhibits considerable motion.
CAREFULLY Selected Words
The statement did not specifically address climate change, but it did mention “extreme weather events and natural disasters” as economic difficulties.
The document’s reference to “trade tensions” rather than the phrase “tariff” was noteworthy.
The global trade rules have been ripped apart by Trump’s tariff measures, and the outlook for the economy is bleak practically everywhere.
Additional tariffs on more than 20 countries are scheduled to take effect on August 1st, with baseline levies of 10% on all U.S. imports and targeted rates as high as 50% on steel and aluminum, 25% on automobiles, and potential levies on pharmaceuticals.
Additionally, the G20 declaration did not refer to the conflict between Israel and Hamas in Gaza or Russia’s invasion of Ukraine, which is a subject of contention for the organization.
Rather, it referred to “ongoing wars and conflicts” without providing any further details.
The communication was less than half the October 2024 document’s about 5,000 words, coming in at slightly over 2,000 words.
Under the motto “Solidarity, Equality, Sustainability” for its presidency, South Africa has worked to advance an African agenda that includes issues like the high cost of capital and financing for climate change initiatives.
In their communique on Friday, the finance ministers and central bank governors reaffirmed their commitment to tackling debt vulnerabilities in low- and middle-income nations in a methodical, thorough, and efficient way.
