Tuesday, September 22, 2009

G 20 Pittsburgh Summit

The G20 club of rich and developing economies will hold a two-day leaders summit in Pittsburgh on 24-25th September’09.
G 20,the group of developed and emerging markets ,comprising of US, India , Argentina, Australia, Brazil, Canada, China, France, Germany, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, Britain and the EU. The group of countries accounts for 90 percent of the global output and 80 percent of world trade.
The proposed key issues to be discussed are the Doha round, management and regulation of World bodies like IMF, rebalancing of power within nations.
US meet to discuss the plan to build a more balanced developed economy, a framework to boost the savings in US and reduce the export surplus of Countries like China.
The developing countries will seek more say in world bodies like IMF, World Bank International Fin Corp. India has committed to invest up to $10 billion in the IMF to enhance its say in IMF.
Important and diverse issues are on cards. The result of the summit can hold solution to key problems looming over the world trade and growth.
And as the world leaders meet, the world watches..


mohit said...

G20 summit can not be called a complete success but yet cannot be discarded as a failure. Some of the positives from the summit were:-
1. India and China getting more recognition in terms of voting rights
2. Now truly G20 represents the face of the world as it comprises of the nations which give 90% of output to the world
3. More strict norms were pledged to be taken to prevent the crisis which started last year in US and rocked the world
Basel2 norms are also to be strictly abided by the nations' financial institutions
4. Phasing out of the subsidy on oil and gas products will also help the OMCs in India and also ONGC

For first time, the leaders have looked dedicated to join hands to overshadow the impact of recession but still some challenges like Doha Round remain. Hope the next meeting of WTO brings a healthy solution to this also

Tanuja Kumari said...

G20 was not a failure but cannot be called breakthrough event in international finance arena.This is because if we take any issue,be it the rebalancing of power ,regulation of financial markets ,global trade or vesting more powers to the emerging economies,none of the issues have been given clear thought.
1. No agenda has been made for curbing the excessive current account surplus or deficits of nations.
2. To regulate finacial markets,IMF has been given the resposibility to find ways to regulate the banks with international presence.The Financial Stability Board has come out with solution like giving the 50 % bonuses to bankers in the form of shares or share linked products.
3.Emerging economies will be give voting rights 5 % of the quota of developed economies,as compared to 7% demanded.

But G20 meeting can be said as an important step for reforming and regulation of international markets.

@ Mohit

Please explain how the subsidy on oil and gas will help OMCs in India.I dont think curbing subsidies in oil,kerosene and gas is a possible for UPA Government.

mohit said...

It is difficult to cut the subsidies at one go but as the government has said it will do it in phases in 5-7 years. Coming to how will it help OMCs and ONGC, here are some points
1. The private players like Reliance, Shell and Essar have been finding it quite tough for them to expand due to the subsidies to their public sector counterparts. These subsidies will help these companies

2. ONGC has to give the discounts to the refiners like Reliance and it is not possible to make advantage of the soaring prices in the global market for the company.

3. The companies(OMCs) have to depend more on the oil bonds and have to wait for their expansion plans due to more and more dependence on central government.

The cut in subsidy will help the market decide the value of oil to be sold

Regarding the question of possibility of UPA to implement the subsidy:-
1. At first it looks tough but it will make the country look forward to alternative fuel usage like CNG in New Delhi and till the time complete cut in subsidy is implemented, the country will be prepared to face the oil challenge

2. World over $300 billion are spent only in oil subsidies, such huge amount if saved can be used for other public infrastructure related purposes

3. Its a worry that oil and other natural gas resources will get depleted due to the overwastage of oil in our country, this step will keep a check on such wastages

It is difficult to implement but yes in a phased manner can be and will be done by the government without deleting their vote bank

sumit said...

My view is first of all G20 summit should free the $ tied trade of oil. Today Oil rich nations like Saudi are trading oil with rest of the world in $ (except when Saddam have tried to sell in other currency also- and we have seen the Americans reaction, Yaser Arafat too joined leauge later of selling oil other than $ as well), only USA will be benefited from this trade....US $ fluctuations will only affect the rest of the world and not US.

As Oil is the major trade commodity accross globe..a new currency or a new measure should be taken by G20 body..which will ensure that no particular country is at special advantage.

Sumit Chintawar
IBS Hyderabad

soni said...

G20 decided about curbs on banker's pay. Is it only related to deferred compensation or it also puts a cap on quantum of risks that investment banks like JPMC take?