FINANCE ministers and central bank governors from the Group of 20 leading countries (G-20), which includes South Africa, emerged from meetings at the weekend in Moscow, Russia, with a renewed commitment to address sluggish growth, unemployment, financial market volatility and tax evasion.
The meetings reviewed the global economic conditions and discussed policy actions. A weak global growth outlook will mean subdued employment prospects both globally and locally.
The International Monetary Fund (IMF) expects the global economy to expand 3.1% this year, down from an earlier forecast of 3.3%. Its chief, Christine Lagarde, described the main meeting on Saturday as fruitful.
"We had constructive discussions.… We also agreed on the importance of comprehensive structural reforms to raise productivity, reduce rigidities and support growth," Ms Lagarde said after the meeting.
There had been some expectation ahead of the meetings that they would provide representatives from Brazil, Russia, India, China and South Africa (Brics) with the platform to discuss and propose joint measures to limit the fallout of a stronger dollar and the effect of reduced stimulus measures by the US Federal Reserve later this year on emerging market assets.
However, a Brics official who attended the meetings said: "There are no discussions inside the Brics about measures to battle a stronger dollar."
The meeting communiqué showed ministers chose to address financial market volatility facing all countries and not just that affecting emerging markets.
Discussions of public finances saw ministers agreeing that strengthening existing practices of public debt management was an important means of achieving more resilient public finances.
South Africa is among countries pushing for an end to wasteful spending in an effort to reduce budget deficits over the coming years.
But Russian Finance Minister Anton Siluanov said: "Colleagues have not made the decision to take responsibility to lower the deficits and debts by 2016. Some people thought that first you need to ensure economic growth."
The South African government’s renewed commitment to spending restraint recently saw rating agency Moody’s affirm its sovereign rating for the country at Baa1. "We believe that (the South African) authorities are on the right track from a fiscal point of view," said Moody’s senior vice-president Kristin Lindow last week.
"From a rating perspective, if the debt trajectory does indeed start to stabilise and come down within the next couple of years, then, other things being equal, that should keep ratings intact."
Tax policies also dominated discussions, with ministers and central bank governors warning that the spread of the digital economy posed challenges for international taxation.
Ensuring that all taxpayers paid their fair share of taxes was a high priority in the context of fiscal sustainability, promoting growth, and the needs of developing countries to build capacity for financing development, the ministers said.
"Tax avoidance, harmful practices and aggressive tax planning have to be tackled," their communiqué said.
South Africa has also been sharpening its tax regime. Finance Minister Pravin Gordhan last week introduced a new eight-member tax review committee whose mandate includes examining the corporate tax system and also looking into the role of the tax system in the promotion of inclusive economic growth and fiscal sustainability.
The Organisation for Economic Co-operation and Development (OECD) unveiled new plans before the ministers, aimed at tackling tax evasion by improving the way tax authorities share information about individuals and entities such as trusts.
Countries are increasingly moving to a standard of sharing information on taxpayers, even without a specific request.
This is more likely to flag inappropriate behaviour than the established practice of one tax authority starting an investigation into suspicions of wrongdoing, and then making a request for data from another.
The European Union has estimated that hundreds of billions of euros are lost each year to tax evasion.
The stashing of undeclared earnings in accounts in offshore jurisdictions has long been a favoured method of hiding cash from one’s home tax authority, aided by the veil of secrecy.
The OECD, which advises its mainly rich-nation members on economic and tax policy, issued an updated standard for the automatic exchange of information at the sidelines of the meeting of the finance ministers on Saturday. The organisation hopes to have a new draft agreement ready for countries to sign late this year.