Astana Economic Forum
The world’s leading policy makers, financial experts, distinguished politicians and Nobel Prize winners gathered for the Sixth Astana Economic Forum on 22-24 May 2013 in Kazakhstan’s capital. The annual international forum’s agenda focused on the challenges of ensuring balanced global economic growth: volatility on commodities markets, perspectives of sustainable development, incentives for global competitiveness, increasing role of innovations and technologies, fragile financial systems, regional and country risks etc.
The event was traditionally chaired by President of the Republic of Kazakhstan Nursultan Nazarbayev.
The President in his speech for the opening ceremony pointed out five lessons of the global crisis:
- despite the assurances of many financial institutions that financial crisis ended, it continues, more over it threatens by painful “bursts” of a number of local financial systems,
- global recession is caused by the anti-crisis measures taken on national levels,
- it is necessary to overcome the lack of trust between global financial institutions and nation states, between the actors of the financial sector and real economy, among countries,
- financial sector cannot and must not develop in isolation from the real sector, both at global and national level,
- current global crisis is multidimensional, and its course and dynamics are set not only by economic, but also political, humanitarian and moral reasons.
The key messages of the President's statements were the following:
- Kazakhstan is achieving the target to enter the club of 50 most competitive countries in the world,
- Strategy “Kazakhstan 2050” will contribute to the transformation of Kazakhstan into a top 30 most developed country of the world, where progress is based on innovative economic and social principles,
- actively develop renewable energy sources and allocate 2% of GDP annually for investments into “green modernization”,
- establishment of the Board of Trustees to finance the research of fundamental aspects of the idea of G-Global.
More than 12500 delegates including around 3200 foreign delegates from 136 countries attended the Forum, including 30 heads of international organizations, 12 former Heads of the states and Governments, 10 Nobel Prize winners, 40 ministers, 28 deputy ministers. Among guests were: President of the United Nations General Assembly Vuk Jeremic, Prime Minister of Macedonia Nikola Gruevski, Deputy Prime Minister of Iraq Rowsch Noori Sideq Shaways, Under-Secretary-General of the United Nations, Head of the Department of Economic and Social Affairs Wu Hongbo, Under-Secretary-General of the United Nations, Executive Secretary of the United Nations Economic Commission for Europe (UNECE) Sven Alkalaj, Secretary-General of the UN Conference on Trade and Development (UNCTAD) Supachai Panitchpakdi, Deputy Director-General of the World Trade Organization (WTO) Alejandro Jara.
During the Forum 85 events of various formats were held with participation of 600 speakers and moderators. As a result of business negotiations companies signed 85 agreements and memorandums for further cooperation for the total sum of more than 2,7 billion US Dollars, including 500 million US Dollars worth agreements and contracts on innovational projects.
The Forum was used to launch the First World Anti-crisis conference with 3 panel sessions and 4 round-table discussions. The main outcome of the Conference was the Astana Declaration and World Anti-crisis Plan project to be adopted at the next World Anti-crisis Conference in 2014. The main document is available on the website www.aef.kz for discussions by the internet community. It is planned to promote the document and discussions at the upcoming events in different countries.
During the World Anti-crisis Conference representatives of 40 states provided their recommendations, which were reflected in the final document "Recommendations to the Leaders of the G20". Recommendations of the VI AEF have been submitted to G20, G8, IMF, WB and UN for further consideration.
VI Astana Economic Forum
Recommendations for G20 leaders
The world economy after the crisis continues to face a number of problems:
- global uncertainty on the prospects of economic growth;
- the complexity and opacity of the financial structure of the economy;
- crisis of confidence that has a negative impact on investments;
- low business activity, accompanied by rising unemployment.
The global economic recovery remains extremely fragile: the weak, unbalanced growth has significant risks on economic indicators.
To resolve the situation it is necessary to coordinate the response of the G-20 governments in order to ensure the sustainability of the recovery of the global economy.
In this context the main event of the coming year will be the summit of leaders of the G-20 countries, which will be held September 5-6, 2013 in St. Petersburg.
At the initiative of the Russian Federation, the discussion will be focusing on three main priorities, each of which are of systemic significance for post-crisis growth and development:
- Investments - to restore the economy and create new jobs;
- Trust and transparency - to ensure the sustainability of growth;
- Effective regulation - to improve the quality of growth.
From our side, we fully support the initiative of the Russian Federation. Key issues on the agenda of the forthcoming G-20 summit require immediate solutions.
In order to ensure the legitimacy, transparency and efficiency of decision making Russia initiated multilateral consultations with non-members of the G-20 ("outreach"), including governments, intergovernmental organizations, the business community, non-governmental organizations, trade associations, youth, expert and academic community.
The complex effect of the active interaction between these parties, first proposed by the Russian presidency, will enhance the effectiveness of the G-20 for the world community.
One of the partners in the preparation of recommendations for G-20 on issues of global development and stimulating new economic growth is the Astana Economic Forum, which is organized by the "Eurasian Economic Club of Scientists".
Representatives of the Russian Federation have participated in the outreach activities of the VI Astana Economic Forum (AEF) and the World Anti-Crisis Conference (WAC), May 22-24, 2013. Suggestions and recommendations developed at the AEF and WAC will make a significant contribution to the discussion on key problems threatening the global economy.
Astana forum in substantial sense becomes a repeater of wide “Eurasian vision” of the problems of global development. Among these problems – the world financial and economic crisis, which has escalated into world social crisis, and covered both developed and developing countries. Formation of G-20 group has significantly expanded the range of the dialogue on the reform of the global economy. However, after 4 years since the first anti-crisis summit of G20, this format seems to be insufficient.
Over 9000 participants attended Astana Economic Forum, including representatives of international institutions (UN, IMF, WB, ADB, EBRD, etc.), government officials with huge managerial experience, leading scientists, Nobel Laureates, representatives of political, expert and the business communities.
The new format of the dialogue, approved within the framework of the Astana forum has received the broad support and was called the “G-GLOBAL”. Since its inception in January 2012, info-communicational web-site G-GLOBAL has been attended by more than 3 million people. More than 90,000 users from 160 countries have become its permanent members.
The general problems of innovative development, nuclear and environmental safety, ethnic and religious tolerance, and other aspects of geopolitics are discussed. In other words, G-GLOBAL serves as a potential unifying idea of a multipolar world.
Taking into account the suggestions of participants of Astana Economic Forum and the free internet-community, the following recommendations are offered to the leaders of G20, these recommendations were developed in accordance with the framework of the 2013 G-20 summit:
I EFFECTIVE REGULATION - FOR ECONOMIC GROWTH
In accordance with the priorities of the Russian presidency in the G-20, the main directions of effective regulation are linked to the reformation of financial regulation, strengthening of the multilateral trade and ensuring sustainable development of the energy markets.
In order to ensure the stability of the post-crisis recovery of the global economy "Group of Twenty" should contribute to the creation of a unified system of global financial regulation. Such system should ensure an optimal balance of restrictive and stimulating measures in order to ensure stable development.
One of the consequences of the global crisis is the deep simultaneous decline in foreign trade operations around the world. Creation of an effective multilateral trading system that will decrease barriers and contribute to the successful development of regional economic integration is a prerequisite for economic growth, investment and employment.
The energy component of the current crisis associated with the imbalances on the markets and uncertain prospects of alternative energy use is a significant factor in blocking global recovery trends. The efforts of the "Group of Twenty" should be aimed at creating incentives to improve energy efficiency and "green" development, as well as reasonable regulation to ensure the development of the energy infrastructure.
Reforming financial regulation and supervision
Recommendation 1: Stabilize each national economy minimizing the negative spill-over effects of the national macroeconomic policies on the rest of the world.
Today the policies of quantitative easing of the major global economies, which are the main tool to combat slowing economic growth, are seen as one of the aspects that strengthen protectionist trade measures and, therefore, are an obstacle to the resumption of economic activity in the world.
In this context, coordination of monetary policies in the "Group of Twenty" and constructive dialogue to prevent "currency wars" for these countries should remain one of the main directions of international cooperation.
Recommendation 2: Both developed and developing countries need to find solutions to problems of global imbalances.
Large developing countries with a permanent current account surpluses are moving towards expansionary macro policies in order to sustain economic growth. In this case, the governments of these countries need to assess the impact of investment decisions in order to reduce the potential risks of internal imbalances.
Developed countries with a constant current account deficit should decrease demand, without decreasing investments in research in physical and human capital.
Recommendation 3: The national and regional regulation and supervision of financial institutions should be based on similar principles and concepts in order to facilitate coordination and avoid regulatory arbitrage.
International associations of regulators such as the Financial Stability Forum, the BIS, the International Organization of Securities market regulators and the International Association of Insurance Supervisors must expand collegiality in decision-making, and harmonize the concepts and theories of the new standards in the area of financial regulation. The desire of every country to become a full participant in the global discussion on new approaches in financial regulation and to have access to the best practices of effective financial supervision should be satisfied automatically, and the stereotypes of an exclusive club should stay in the past. This requires the adoption of a package of documents for capital, liquidity, risk management, effective supervision in 2013, to set the realization terms of the new requirements, to ensure the synchronization and coordination with accounting standards, IFRS and US GAAP.
Recommendation 4: The risks of the developed countries discontinuation of the programs of quantitative easing.
To date, the quantitative easing programs have played their role, giving impetus to economic growth in some developed countries. In this regard, the G20 is advised to assess the long-term effects of the central banks exiting these unprecedented, anti-crisis programs.
Recommendation 5: The regulation and supervision of the "shadow" banking sector.
Despite the attempts to regulate the "shadow" banking sector it continues to expand its scope.
Meanwhile, it is rather the "shadow" banking sector, than the traditional banks, that was largely the cause of the last financial crisis. In this context, the question remains on whether should "Basel 3" standarts be extended and applied for this part of the financial sector.
Recommendation 6: The International Standards of ranking and rating agencies activities.
In order to reduce systemic distortions in risk evaluation of the assets listed on the market in favor of a country, it is necessary to develop international rating standards and standards for rating agencies operations, as well as to provide uniform international regulation of rating agencies.
Strengthening international trade
Recommendation 7. Completing the negotiations of Doha Round of World Trade Organization
It is necessary to complete the Doha Round of WTO in order to restore confidence in the international trading system with multilateral rules and agreements through an open and responsible trade policy. We once again appeal to bring the question raised 12 years ago, to its logical conclusion.
Recommendation 8: Establishment of the specialized commissions on legal settlement of the transit policies is needed not only at the regional level, but also on a global scale, and could be the basis for mutual discussion at the upcoming St. Petersburg summit of G20.
This measure is particularly important for developing countries, whose exports are generally less competitive and imports are more expensive. This issue is of utmost importance for landlocked countries.
Recommendation 9: Ensuring fair and equal competition on international agricultural markets.
One of the world's most closed agricultural markets - the European Union does not give access even to the members of the WTO and members of the Cairns Group, led by the United States. Legal solution to this and similar problems should give a necessary impulse to resolve this incipient deadlock.
Recommendation 10: Further integration of countries into a variety of regional groups/ free economic zones/ other associations that allow free trade, other favorable conditions for goods and services trade or production is highly desirable, and in some cases - the best possible way to recover from the crisis.
Formation of various regional economic unions has become a growing trend as it allows to take advantage of the integration processes and collaborative sound economic policy.
In these circumstances, the G20 countries are encouraged to advice countries on the institutional design of flexible and open regional trade associations. This measure will provide access to non-WTO countries to exploit the benefits of free trade.
Recommendation 11. Support of the G20 initiatives to counter protectionism in international trade.
The increase of the restrictive measures in international trade will undermine the benefits of trade openness. Moreover, the relationship between the growth rate of world trade and economic growth remains below pre-crisis levels. In this regard, we welcome the initiative of the G20 countries to impose a moratorium on new protectionist measures in international trade until the end of 2014 and propose to extend it until the end of 2015.
Stable development of the energy market
Recommendation 12: The transition to a "green" economy.
The transition to a "green" economy has to be adapted to the specific conditions of each country and has to involve all groups of the population, through the development of knowledge, skills to include the concept of "green economy" in practice.
For the implementation of this transition, we recommend an adjustment of existing sectoral policies, institutional reforms, development of new standards, regulatory framework and tax reforms.
Diversification of production in industrial, municipal and agricultural sectors will increase energy efficiency and reduce pollution and resource consumption.
To achieve the transition to a "green" economy, we need effective coordination between countries, international and regional organizations, NGOs, businesses and institutions, cooperation with the international community to support "green" initiatives.
Recommendation 13. Register of "green" products
Create an updated register of foreground products under the aegis of the G-20 to removing all kinds of trade barriers. Agreements between the WTO, UNCTAD, ICC, the EU, NAFTA, APEC, ASEAN and other areas of trade on the development of "green" trade.
Recommendation 14. Investment in infrastructure for sustainable development
It is essential to mobilize both public and private resources to ensure sustainable development and green growth. We support increased government investment in accordance with the principles of sustainable development of infrastructure (including public transport, renewable energy, energy efficient buildings) and natural capital to repair, maintain and increase its capabilities.
Development, job creation, and the changes necessary to address climate change and sustainable development, require a lot of investment. Institutional investors such as pension funds and sovereign wealth funds now have more than a trillion U.S. dollars. Investing even a very small portion of this amount can have a huge positive impact on the financing of sustainable development.
New and innovative financial instruments that would facilitate the use of the resources of institutional investors need to be developed in order to finance sustainable development, using both public and private resources for the application of capital required to address these global challenges.
To encourage investment and to increase the capacities of alternative energy, countries must enhance cooperation on the development of appropriate financial instruments. In this regard, G-20 countries’ support of the idea for "Green Climate Fund" for developing countries is advisable.
Recommendation 15: Establishment of the G-Global energy club as an institute to prepare outreach events on the issues of clean energy in preparation to the Expo 2017.
The interaction within the framework of this club would allow participating states to work together to develop ways to address such pressing issues as:
- optimization of energy policy and coordination of long-term energy strategies;
- development of common mechanisms for the implementation of energy policies;
- development and implementation of collective energy security policies;
- arranging agreed positions and actions on the global energy market (the formation of a common energy diplomacy);
- development of the transit infrastructure, transport and communications;
- innovation and coordination of investment policies of member countries.
Recommendation 16: Spreading a new model of agreements on corporate resource management of ecosystems with equity participation of capital in the growth of local economies.
G 20 Group should help promote a new type of enterprise resource management of ecosystems through public-private partnerships and concessions. It is a question of multilateral agreements for a period of not less than 30-50 years between businesses, governments, local authorities, basin councils, international organizations to attract investments in the integrated development of administrative areas related to the water pools and in the development of new green industries.
II INVESTMENT - FOR ECONOMIC GROWTH AND EMPLOYMENT
One of the most obvious consequences of the global economic and financial crisis has been a significant decline in the various types of investments, especially noticeable in developed countries.
To resolve the problems of increasing the volume and improving the efficiency of investment funding it is necessary to analyze public policy in this area, the role of public-private partnerships and non-traditional sources of long term financing and to evaluate opportunities to generate resources for investment on the debt and equity markets in the current conditions, as well as issues related to foreign direct investment (FDI).
Problems and challenges of global employment continue to grow. Despite the fact that five years have passed since the beginning of the global crisis, the restoration of economic development will not happen soon. As shown by the ILO report on global trends of employment, unemployment rate in the world is growing. If in 2012 the world was 197 million people out of work, in the next five years, their number is expected to grow to 210 million. The number of unemployed is higher in comparison with 2007 by 28 million. Of all the 75 million unemployed are young people, many of them never had a chance to work.
High income inequality, the decline in consumer demand and lack of confidence in the context of high uncertainty undermine future prospects for economic recovery and growth.
At the same time, in the context of globalization of the global economy and the current level of civilization, the importance of human capital as a factor of social and economic development at the national, regional and trans-national level has been steadily increasing. Discussion on the development of human capital will boost the competitiveness of the countries and that is the key to recover from the current crisis.
Recommendation 1: Increase investment in global agricultural production and social protection, including programs to help poor people gain access to food, and to review the existing policies of some countries that encourage the use of alternative crops.
In doing so, developing countries need to develop agricultural production. Developed countries should help them in this so that they will be able to meet their needs for agricultural products.
Recommendation 2: Every national economy should encourage the investment necessary to implement available technologies at the highest possible speed.
Every nation of the world has the responsibility to invest in its human resources and in its infrastructure as to unleash the entrepreneurial skills of its people and to create the investment opportunities that will help to implement the most efficient available technologies in the production of the goods and services demanded by their population.
Recommendation 3: Developing a special report on FDI.
Practice shows that foreign investment in general dominate the natural resource sector and real estate, which, given their well-known unstable conditions often are subject to fluctuations.
This strategy doesn’t generally promote stability in the labor markets, doesn’t stimulate the development of human resources (because they are not involved in the sphere of material production, where it is more relevant), restricts economic growth opportunities.
That is why this issue needs a detailed study. We hope that G-20 prepares a special report on this subject on one of the future working group events and consider its recommendations at the G-20 summit.
Recommendation 4: Promote the implementation of the state policy in support of innovative cross-sectoral partnerships for the development of entrepreneurship.
Governments should create favorable conditions for small and medium-sized enterprises investments in innovation and promote the development of cross-sectoral partnerships in business.
Recommendation 5: Building a better investment climate for job creation.
Stimulating private sector development is essential for the creation of productive jobs. Government policies should be coherent and have predictable plans. It is necessary to carry out financial reforms to restore the banking sector in terms of support for investments and lending. Political leaders need to focus on the growing problem of youth unemployment.
Recommendation 6: Stimulating global demand.
High unemployment, reduced real wages in many developed countries caused a decline in consumer demand, which could stimulate economic growth. It also highlights the disparities in incomes and wages.
Growing consumer potential of the middle class in developing countries is the positive factor of development, which can be an important engine of world economic growth, although not as fast and immediate.
Recommendation 7: Youth entrepreneurship and self-employment.
Young people often have the potential to become successful entrepreneurs, but do not have business education and capital to build their own businesses. Governments and social partners should create an environment that will enable young people to realize their business ideas and minimize errors.
Recommendation 8: The flexibility of the labor market
The problem of labor market flexibility is important both for countries where the labor market is just starting to develop, and for the industrially developed countries as it allows better use of work time and production capacities. Flexible labor market provides an opportunity to adapt to changing conditions and allows transition from one form of employment to another for workers.
Recommendation 9: The active employment policy
High unemployment can lead to social and political unrest. In this regard, it is necessary to carry out deep structural reforms and to introduce a variety of strategies (promoting entrepreneurship and innovation through the creation of special educational programs and business incubators at universities) for the employment of the most vulnerable segments of the population, especially among young people. Rise in youth unemployment can lead to so-called risk of "lost generation." Thus, according to the UN ILO there are almost 75 million unemployed young people in the world.
The set of measures aimed at reducing unemployment, should be focused on stimulating the creation of new jobs, retraining the unemployed, improving the competitiveness of the labor force. This requires an effective system to support the development of human capital, both on global and national levels.
Recommendation 10: The problems of the labor market associated with the demographic situation.
The demographic problems associated with the aging of the population in many countries, including the countries of G20, may have a negative impact on the economic and social systems of these countries. If the emerging trends on the labor markets of these countries are not countered, there will be an increasing number of non-workers that account for a single worker.
To resolve this systemic problem G20 countries need to: change the retirement age to stabilize the dependency ratio, promote diverse approaches in the pension system, adapt immigration policies to the labor market, to stimulate the birth rate and the struggle with mortality, etc.
Recommendation 11: Review of indicators of the sovereign rating.
Such indicators in the sovereign rating, which reflect the quality of social progress are getting more important. Indicators that reflect the social status of the population should be considered alongside well-known macro-economic indicators of national economic development (gross domestic product, economic growth, etc.). This approach is becoming increasingly popular in the scientific and expert circles and among politicians.
Employment of vulnerable groups
Recommendation 12: To promote the employment of people of pre-retirement and retirement age, women and the disabled
To provide employment for vulnerable groups of the population it is necessary to create an enabling environment and develop new policy instruments to empower and engage people of pre-retirement and retirement age, women and disabled people in private enterprise. Free business training, and favorable lending conditions can be used as support tools.
International Development Assistance
Recommendation 13: The development of free trade of means of production and technology.
G20 countries are responsible for identifying obstacles to the free flow of technology, knowledge, capital goods and financial capital across national boundaries and negotiating the removal of such barriers. According to the latest negotiations in the WTO it is necessary to strengthen measures to protect intellectual property, including the work being done in virtual space.
Recommendation 14: Develop and implement international standards of living of the population.
We call upon the G20 to establish a working group on the formation of international standards of living of the population in order to ensure access to basic goods.
Inclusive and balanced growth to improve the welfare of all groups of the population should be the basis of social policy.
It is necessary to ensure that all segments of the population exploit the benefits of economic development, to contribute to reducing the gap in income and wealth. This, in turn, should not only bring social benefits, but also lead to higher economic growth. Low demand due to lack of income consequently leads to low consumption of lower and middle class, while excessive concentration of income in the hands of the higher classes is one of the reasons of the prolonged global recession.
Thus, national governments and the international community as a whole should use the fiscal policy and labor market policies to reduce income inequality. Social programs aimed at ensuring access to education and improving its quality, the reforms in the health system, correlation between wage increases and labor productivity growth should be an integral part of national policies aimed at sustainable and balanced economic growth.
Recommendation 15. Defining the UN’s goals of the Millennium for the period after 2015.
We urge the G20 countries to formulate post-goals of the Millenium focused on resolving the global debt problems. Given the importance of resolving the debt crisis in the Euro zone, the mechanisms of regulation must be legitimate and focused on the priorities of human development.
Food supply security
Recommendation 16: Develop and approve a detailed plan of action to address the food problem in the world at the G-20 Summit.
The goal is to increase food production by 70% in the coming years in order to feed people all over the world. This is a key question for any country, especially for the G-20 countries that account for 80% of food production in the world.
We should improve the monitoring and exchange of information on the state of the global food market, projected volumes of supply and demand for food in order to prevent its deficit, inform market agents and, if necessary, apply intervention measures on the market of agricultural products and food.
Ensure concerted action by FAO and WHO to effectively monitor the quality of food.
Develop a harmonized approach to forecasting balances of the global and regional food markets.
Considering the fact that the production of ethanol and biodiesel, on one hand contributes to solving global energy problems, but on the other hand impede solving the food supply problem, G-20 should implement concerted actions in terms of production of biofuels.
We need to increase transparency in agricultural markets. Implement agreements that prevent speculation on the grain and other major agricultural products markets. Reduce the impact of volatility in prices of agricultural products on the most vulnerable countries.
Recommendation 17. Prevention of tension in the food markets through restricting speculation on the prices of food products
To avoid spikes in food prices it is necessary to deploy a network of exchange stocks and of food, located in different regions of the world, and independent of each other. Under the aegis of the International Food and Agriculture Organization it is necessary to establish a system for monitoring food supplies in the states, which will also monitor threats of drop in production of agricultural products due to natural disasters, spread of infections and pests.
Recommendation 18. Enhancing control over the market of genetically modified products
In order to prevent mass consumption of food products, hazardous to health, in addition to existing methods of certification, sanitary, veterinary and phytosanitary control, in connection with the emergence of fundamentally new food products, produced from genetically modified organisms. It is necessary to develop and, with the assistance of the World Bank, to implement a program of action, providing adoption of international standards of nano-, genetic engineering and cell technologies. Within the framework it is also necessary to develop and adopt technical regulations of food production with the use of nanotechnology, genetically modified organisms and raw materials derived from them.
Another recommendation is to create a Fund, which will finance independent research on GMP safety or unsafety. The results of these studies should be made available to the global community, and form the basis of the UN resolutions on the possibility of the use of GMPs to fight hunger in the world.
Recommendation 19. Develop a quality system of free financial education for people of retirement age, youth and entrepreneurs
Lack of financial and economic literacy of a large part of the population in emerging markets limits the ability of people to make effective decisions about their financial future. That results in the adoption of low-quality business plans, and thus reduces their access to credit resources. Wide promotion of the foundations of business and business culture, including through the establishment of specialized courses and workshops in schools and counseling centers for young people and aspiring entrepreneurs will enhance their ability to open, maintain and develop businesses.
Recommendation 20. Increased use of the Internet for the promotion of financial literacy.
We urge the G20 countries to provide financial support for distribution of information and materials on financial literacy for children and adults through the internet. This measure will reduce the risk of loss for the population that uses financial products and services, including the risk of being involved in fraud schemes.
III TRUST AND TRANSPARENCY - FOR ECONOMIC GROWTH
Last global financial and economic crisis has revealed the gaps and weaknesses of the international financial and monetary system. At the same time many of the fundamental flaws of this system, which led to the emergence of the global economic crisis of 2008-2009 have not been resolved. These systemic weaknesses require the implementation of a large-scale and fundamental reform of the global monetary system.
The financial and monetary system reform should lay the groundwork to strengthen the global economy and to build a more balanced and effective international financial architecture to prevent future crises. To achieve this goal it is necessary to continue work to further improve the efficiency and legitimacy of the IMF's governance, which will be logically conclude with the reformation of the IMF quota and governance that initiated back in 2010 as well as the revision of the IMF quota principles to adequately reflect the relative importance of the current shareholders of the fund.
It is also necessary to provide equal opportunity for countries in the legislation of the IMF and the World Bank management.
In this regard we propose the following recommendations:
Reforming the international monetary and financial system
Recommendation 1: Further reform of the global monetary system
The last global financial and economic crisis has shown that the existing is in need of a radical reform. Some steps in this direction have already been made, but they are not sufficient.
The main scenario of a change in the global reserve system is expected evolution of the new global monetary and financial system in which several currencies will act as reserves on the global level.
It is recommended to continue the gradual, evolutionary progress in this direction.
Recommendation 2: Raising responsibility of the issuers of global reserve currencies
The country issuing global reserve currency has certain advantages: the ability to cover the deficit of the balance of payments with the national currency, to promote the competitiveness of national corporations on the global market, etc.
Therefore, the list of countries that claim to be the world's reserve currency recently expanded. But the nomination of country’s currency on the role of global reserve should impose specific duties. Such as currency stability through compliance with certain restrictions on the size of public debt and balance of payments deficit, the removal of foreign exchange and trade restrictions, compliance with the requirements on transparency of the emission mechanisms.
Recommendation 3: Continue the reform of international financial institutions.
Over the past few years there has been clear progress in reforming the international financial institutions.
Changes that occur in the global monetary and financial system, will give these institutions more authority and legitimacy in the exercise of the functions of supranational global regulator.
Therefore, we on our part fully support what has been done and recommend the G20 to continue work in this direction.
Recommendation 4: Coordination of regional financial mechanisms.
Regional financial mechanisms or «safety nets», at the moment are important tools for the global financial architecture. There are about a dozen of the RFM’s in the world. They have enormous resources, for example, the capital of the European Stability Mechanism (ESM) is about 900 billion U.S. dollars.
The main objective of the RFM’s is to support the balance of payments and budget of the participating countries, and reforming their economies to enhance resilience to global cataclysms. Although better coordination between the RSM’s and the IMF is recommended. This will allow more efficient use of resources, reduce risk and achieve the desired result
Recommendation 5: Develop a permanent body for global currency regulation.
The sharp fluctuations in exchange rates, including the so-called "hard" currencies, have become a common occurrence in recent years. The amplitude of such fluctuations is growing while the influx of speculative funds in the international currency market and in derivative financial instruments on the basis of exchange rates is growing.
G-20 are able to have an impact on the reduction of random flows of capital and distortions in exchange rates, and to develop a set of tools to enhance global security.
There is a need for a permanent body for global foreign exchange management on the basis of the Board of G20-countries’ central banks to smoothen volatility in the foreign exchange market and provide opportunities to quickly and coherently respond to the exchange rate fluctuations.
Recommendation 6: External debt control
We believe that global methods of rigid borrowing control that would prevent quick and unjustified increases in the size of the external sovereign and corporate debt should be found.
International capital movements in all offshore jurisdictions should also be taken under special control.
Recommendation 7: The tax on international financial transactions.
Tax on international financial transactions could generate sufficient funds to cover the financial costs of maintaining financial stability, and to provide sufficient time to restore solvency through fiscal consolidation and structural reforms.
An additional step is to direct tax revenue in the form of aid for the development of an international institution that will offer these funds on special terms to developing countries or sectors undergoing the process of transformation.
Recommendation 8: Developing a system of international regulation of national anti-corruption programs.
This system will help strengthen the response of the international community in exposing corruption in the activities of international companies in other countries. International coordination will also facilitate the spread of good practices and the
development of anti-corruption education.
Recommendation 9: Promoting best practice standards of responsible business practices as a means of preventing corruption.
During the post-crisis global economic recovery anti-corruption initiatives contribute to the business community’s involvement of motivated employees and investors focused on the highest ethical business practices. This process will help restore confidence in the global business environment and have a positive effect on economic growth.
Recommendation 10. We support the implementation of the G20 Anti-Corruption Action Plan for 2013-2014.
The Working Group on Anti-Corruption G20 can demonstrate transparent and inclusive approach by setting an example. In particular, the publication of the schedules and agenda of the Working Group meetings in advance, as well as the publication of the draft recommendations with the possibility of interactive discussion will attract experts of global civil society in the process.
Recommendation 11. Accession of the G20 countries to the initiative for transparency of international aid.
Increasing the transparency of international donor programs is an important global anti-corruption initiative, comparable to ensuring the transparency of mining industries, budget transparency and public procurement.
Given the fact that international aid is about 10% of the budgets of the poorest countries, we urge the G20 countries to join the practice to improving the transparency of international aid flows through publication of clear and understandable information available for public and audit firms.