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Jokowi urges bigger role for emerging markets in G20

President Joko “Jokowi” Widodo has suggested to G20 leaders that global financial architecture should be reformed so that developing countries play a bigger role in international funding organizations.

The President also underlined that a new global reserve currency was needed to reduce dependency on the US dollar at the G20’s first working session on the global economy and inclusive growth on Sunday in Antalya, Turkey.

“High dependency on the US dollar has created global distortions that pose a threat to the development of the global economy,” Jokowi said in a press release distributed by the presidential communication team.

As part of an attempt to reduce dependence on the US dollar, Jokowi said China had agreed to a US$5 billion liquidity support related to the bilateral currency swap agreement (BCSA), in addition to the $15 billion commitment made previously. Under the agreement, Indonesia and China agreed to use yuan instead of US dollars in their trading activities, as well as in other areas.

“The amount is very good. Not to mention that, as the investment is upcoming, it will have a [good] impact on capital inflow,” Jokowi told reporters on Sunday evening local time, after an informal meeting with Chinese President Xi Jinping on the sidelines of the G20 Summit.

During the first G20 working session, the global economic slowdown was at the heart of the discussion, which also discussed the International Monetary Fund’s (IMF) prediction of 3.1 percent global economic growth this year, lower than last year’s 3.3 percent, Finance Minister Bambang Brodjonegoro said.

Despite predictions of improving global economic growth to 3.6 percent in 2016, both developed countries and emerging markets agreed that the slowdown needed to be addressed immediately by making joint efforts.

“One of these efforts is by ensuring that [one’s own] domestic economy is running well, just as China, Indonesia and many other countries have done,” Bambang said on Sunday evening.

Jokowi told the G20 forum that infrastructure development was one of the ways to address the economic slowdown, Bambang added.

“In the short term, infrastructure can create new jobs, while in the medium and long term, it can help improve the economy itself,” Bambang said.

Indonesia also expressed its commitment to keep contributing to efforts to lift the members’ combined gross domestic product (GDP) by at least an additional 2 percent by 2018, an ambitious goal set by member countries at the previous summit in November 2014.

Bambang added that the stimulus packages that the government had rolled out this year would contribute to that goal and also create inclusive domestic growth.

If realized, the G20’s 2 percent target would add more than $2 trillion to the global economy and create millions of jobs.

However, one year after the agreement was made turmoil in the financial world cast doubts over its ability to be realized.

Data from the Organisation for Economic Co-operation and Development (OECD) show that the combined GDP of G20 nations reached 3.3 percent last year. In 2015, the rate eased on a quarterly basis, standing at 0.7 percent only in both the first and second quarter, making the growth target a seemingly daunting task.

Source : www.thejakartapost.com, Tuesday 17 November 2015