Earlier this year, the International Monetary Fund (IMF) warned that global debt levels have reached all-time highs and that the world economy is now even more highly leveraged than before the global financial crisis began a decade ago. The number of poor countries at risk of debt crises has surged, and major emerging economies have been hit. This includes Argentina, the first South American host of the G20 Summit, which requested the largest IMF bail-out loan ever this year and imposed harsh austerity policies on its citizens.

Sleepwalking into the next debt crisis

In this context, one might have thought that Argentina’s 2018 presidency of the G20 would have led to substantial agreements and innovations – although its track record was not very promising. However, in terms of solutions, the summit became a non-event. The group’s policy response – or the absence of any significant policy response, as expressed in the G20 Leaders’ Declaration – is another major disappointment, if not outright dangerous. The outcome document contains just some vague and generic statements on fiscal and monetary policies, on monitoring capital flows and building debt management capacity.

The most substantial outcome is a renewed political mandate for the IMF, World Bank and others “to improve the recording, monitoring and transparent reporting of public and private debt obligations”. While creating better tools to unveil hidden debts is certainly a good idea, even the amounts of debt that are already known are causing severe problems, and have already taken the first countries down.

Instead of building better institutions for the prevention and resolution of crises, the G20 is sleepwalking into the next crisis. The fact that Argentina did not use its G20 presidency to promote innovations that the country once championed – such as a multilateral legal framework for sovereign debt restructurings – was a missed opportunity. Given the serious economic crisis still facing the country, it seems that the strategy of the host government was to get international backing – including private investors’ support for its infrastructure plans – by holding 17 bilateral meetingswith world leaders.

Still promoting privately financed infrastructure

Meanwhile, the problematic issue of private financing of infrastructure still dominates G20 discussions. In the communiqué, G20 leaders endorsed the Roadmap to Infrastructure as an Asset Classand the G20 Principles for the Infrastructure Project Preparation Phase. These are not new documents: the Roadmap, released in March, is shaping the work of the G20 on the controversial idea of developing infrastructure as an asset class – a flagship initiative of the Argentinian presidency. The Principles set out a framework that heavily focuses on achieving “a high standard of business case development” while it falls short of considering the sustainability aspects of infrastructure.

However, as Eurodad highlighted earlier this year, the G20’s work in this area does not take us any closer to finding responsible solutions to people’s infrastructure needs. It ignores the fundamental concerns, namely that: 1) there are no indications that this will work, in particular for the poorest countries, which normally lose out in the battle to attract private investment; 2) there is a very significant risk that this will come at a high price for the public purse, and potentially contribute to the already escalating debt problems worldwide; and 3) while the G20 keeps focusing on private finance, it’s distracting itself from the real question, which is how to improve the quality of infrastructure and how to mobilise the public finance that is, and always has been, crucial for building infrastructure.

Continuing failed approaches to address corporate tax avoidance

Another G20 task that has been left unresolved is the challenge of stopping international corporate tax avoidance – in technical terms known as “Base Erosion and Profit Shifting” or BEPS. The G20’s BEPS package from 2015 included a number of very problematic loopholes, which allowed large-scale corporate tax avoidance to continue. More fundamentally, BEPS failed to address the fundamental problems in the international tax system, including finding alternatives to the failed transfer pricing system, and reconsidering the overall fairness of the tax system.

At the same time, the BEPS process was in itself highly problematic, since more than 100 developing countries were excluded from the negotiations. However, the closest the G20 has come to acknowledging these shortcoming is the fact that now, three years after the adoption of the BEPS package, some leaders are apparently starting to talk about the need for “BEPS 2.0”. But the solution does not lie in pursuing a failed and illegitimate approach. Instead, it is time for the G20 to listen to the Group of 77, a coalition of more than 130 developing countries, which has repeatedly called for a transparent process at the United Nations to develop a new, more effective and fair international tax system.

Next steps for the G20

For now, the G20 Summits are set to carry on as usual, heading for Japan in 2019 and Saudi Arabia in 2020. But so will the calls for alternative approaches. In Argentina, civil society organisations gathered at the “People’s Summit”, to call for economic justice, gender justice and environmental justice, while raising concerns about imperialism and the favouring of the interests of large multinational corporations. These points were also raised in large street protests outside the summit, serving as a stark reminder of the many concerns that the G20 has made a habit of ignoring.