G20 Presidency Strengthens Global Financial Sector
By : Abdullah )*
Indonesia has the honor of becoming the G20 Presidency in 2022. The theme of this year’s G20 Summit is Recover Together, Recover Stronger, so that each member works together to overcome the effects of the pandemic, especially in the economic field. Global finance will be strengthened because there is a Financial Intermediatary Fund that is the savior.
The pandemic hit the economies of almost all countries, threatening their financial health. Even in a country that has been strong, such as the UK, it is still threatened with recession, due to the long-term effects of the pandemic. To prevent a global recession and strengthen global finances, this year’s G20 Summit held in Indonesia, took an important step in strengthening the global financial sector.
Bank Indonesia Governor Perry Warjiyo stated that the G20 Indonesia Presidency is working together to address and find solutions to various challenges that are occurring, so that the economy recovers. For this reason, in addition to seeking handling with fiscal policy instruments, finance ministers and central bank governors of G20 members also seek from the monetary side.
This is because economic recovery cannot be done with only one policy instrument. Given the current global economic challenges, it consists of various problems, ranging from inflationary pressures, to tightening interest rate policy.
In a sense, currently the challenges of the global economy, one of which is inflation, when the prices of barang rise drastically. Inflation occurred as a result of the political situation in Eastern Europe, when Russia attacked Ukraine. In fact, there is the largest oil refinery, so the production and distribution have faltered, and the world oil price has risen drastically (100 dollars per barrel).
When the world oil price rises, it affects the price of fuel in all countries and causes the price of goods to rise, and inflation occurs. Although inflation in Indonesia is still in a mild status (because it is only 4%) but the government is trying not to increase drastically. You do this by becoming the best possible G20 Presidency.
Ukraine is a member state of the G20 so it is automatically invited to the G20 summit. Ukrainian President Volodymyr Zelenskyy has not confirmed he will come to Bali and attend the summit. However, he welcomed President Jokowi during his conference in Kyiv, Ukraine.
Meanwhile, President Jokowi also tried to invite the President of Russia, Vladimir Putin, to the G20 summit, because Russia is also a member of the G20. Although Putin has not said yes clearly, but there is no negative response. This means that Russia and Ukraine will meet at the G20 summit and Indonesia is trying to mediate so that their conflict ends.
When the Russian-Ukrainian conflik ends, it is hoped that the world oil problem will also end, because the oil refineries are active again. Thus, the global financial sector is also back to health. Indeed, the relationship between the economy and politics is very strong, and President Jokowi took a strategy so that the global economy can be saved through the G20 Summit.
Meanwhile, Minister of Finance Sri Mulyani, stated that in the G20 finance ministers and central bank governors’ meeting, achieved a commitment to support the G20 Presidency with the theme Recover Together Recover Stronger. The meeting discussed the triggers for the shock of the global financial sector, ranging from wars (in Eastern Europe) to rising food and energy prices.
G20 countries are looking for solutions to get out of the negatif effects of the pandemic and scarring efect (anxiety). You do this by establishing a FIF (Financial Intermediary Fund). The financial intermediary fund will address global health and pandemic response. The costs for post-pandemic recovery will be resolved in the long term.
With the help of the FIF it will solve various financial problems, especially in underprivileged countries. They will not collapse or go into recession due to the prolonged pandemic. Meanwhile, FIF funds from donor countries. Fif’s operating arrangements are still under discussion and Indonesia will co-chair with Italy.
Meanwhile, to overcome global economic problems, one of which is by strengthening the green economy and strengthening food security. Indonesia as an agricultural country is proud to be the G20 Presidency and teach good and modern agrarian governance. One of them is the ‘Millennial Farmer’ program which can not only farm but has broad insights and can market its products well.
The Indonesian people are proud to be trusted to be the G20 Presidency and co-chair of the FIF. This means that in the association between nations, Indonesia has a respected position, even though its status is still a developing country. The leaders of other countries viewed Indonesia as having the power to overcome the effects of the pandemic, especially in the economic field, and praised President Jokowi’s performance during his nearly 2 terms as a leader in the country.
The G20 Presidency will strengthen the global financial sector, thereby minimizing the risk of inflation and global recession. Indonesia became a leader at the G20 Summit and set an example, by establishing a FIF that would address various global problems (especially in the economic field) that occurred due to the effects of the pandemic. The global economic crisis can be avoided because there is cooperation between G20 members.
)* The author is a contributor to persada institute