The first meeting of sherpas of the Group of 20 (G20) under SA’s presidency will seek to establish a commission where the forum of the world’s leading economies will push for the reform of the global financial architecture.
This cost-of-capital commission seeks to deliver a review affecting high debt levels among countries within the global south, including SA and the African continent, and the cost of servicing the debt amid fiscal space challenges.
SA seeks to build on the previous presidencies of Brazil, India and Indonesia, which all prioritised, among others, fair financing, reform of Multilateral Development Banks (MDBs) and achieving fair international taxation regimes.
At November’s leaders summit in Brazil, heads of state agreed to address the possibility of taxation of billionaires, measures for the energy transition, the global governance reform and the acceleration of climate action in an effort decrease inequality and fighting against poverty and hunger.
“That commission will help us in terms of outlining the cost of capital for developing countries... The African can't be paying so much to some of the multilateral institutions,” international relations and co-operation minister Ronald Lamola said.
“It will also be in line with what the UN Secretary General [António Guterres] has started... so we will be helping with the implementation.”
Lamola was speaking on the sidelines of the G20 sherpa meetings, which are being held in Johannesburg at the Investec headquarters for four days until Thursday.
“[Multilateral institutions] must evolve to meet the challenges of our time, ensuring that they are inclusive, representative, and capable of addressing the complex issues we face. From climate change to economic inequality, global health crises, and geopolitical tensions, these institutions must be the bedrock upon which we build a more just and equitable world,” Lamola said during the opening plenary of the G20 Sherpas on Monday.
“As the premier forum for international economic co-operation, SA seeks to amplify the G20’s continued value as a forum of the world’s largest developing and developed economies, a forum that provides leadership and momentum towards greater global economic growth and sustainable development.”
The high debt costs for sub-Saharan countries constrains their ability invest other domestic issues such as climate change and can crowd out funding for development. Over the last decade until 2021, data from the World Bank shows that external debt of Sub-Saharan countries grew from $425.8bn in 2012 to $815.7bn in 2021.
“If a country decides to tax people so that it is able to pay its debt there’s going to be inflation, the AU’s G20 sherpa, Albert Muchanga, said.
The sherpa meetings will set the tone of SA’s G20 presidency. The Treasury and the Reserve Bank are leading the finance track, and the department of international relations and co-operation leading the sherpa track.
“The first sherpa meeting lays the political [groundwork], which will frame the manner in which not only the sherpa track and the finance track will work but also the working groups. As the sherpas, we will be working on how the dialogues will be taking place over the next 10 months,” said SA’s G20 sherpa and director-general at Dirco, Zane Dangor.
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