President Cyril Ramaphosa held a bilateral meeting with his Switzerland counterpart President Karin Keller-Sutter on the margins of the first meeting of the G20 Finance Ministers and Central Governors in Cape Town.
Image: GCIS
Mushtak Parker
THERE is something surreal going on in the international economic and financial stability discourse, much of which converged on the Cape Town International Convention Centre over the last week for the First Meeting of the G20 Finance Ministers and Central Bank Governors under the South African Presidency for 2025.
Whether in the address by host President Cyril Ramaphosa at the G20 finance ministers' and central bank governors' meeting on February 26-27, or in IMF Managing Director Kristalina Georgieva’s Statement at the conclusion of the said meeting, or in the statement by Rebeca Grynspan, Secretary-General of UN Trade and Development (UNCTAD) on the international financial architecture, or the Chair’s Summary of the Meeting, it was as if there was a collective conspiracy of silence relating to the trade, investment and tariff policy pronouncements of the second term Trump Presidency.
It is oft said that politics is the art of the possible, but to ignore the daily shenanigans emanating out of the Oval Office since the end of January, characterised by a surfeit of outrageous policy pronouncements and inevitable U-turns because they are more on the hoof actions as opposed to well thought out policy constructs, is either a discourse of the delusional or a dilemma of the desperate. The irony is that whoever occupies the White House, the US being the largest and wealthiest economy in the world, will always have an important impact on the rest of the world and on the Post-War Bretton Woods institutions of which the World Bank/IMF Group and the UN and its agencies are the standout ones.
A further irony is that the very South African G20 Presidency for 2025 with its ethos of ‘Solidarity, Equality and Sustainability’ – the antithesis of the Trump economic doctrine - is threatened given that Pretoria was the first target for the incoming administration resulting in US funds being frozen for various aid projects and others being reviewed including South Africa’s membership of AGOA with its preferential tariffs, ostensibly against the Ramaphosa government initiating a case of potential genocide by the Netanyahu Government in Gaza at the ICJ, and against the passing of the Expropriation Bill into an act which Trump claims marginalised the white Afrikaner minority and ignored their land rights.
Perhaps there is something in this selective amnesia strategy given that any policy deliberations at the World Bank/IMF and the UN and its agencies usually take a gestation period of several years by which time President Trump’s term would have expired. Even the latest IMF Executive Board 2024 Article IV Consultation with South Africa and its subsequent Report on Selected Issues on South Africa at end January 2025 refrained from discussing the potential impact of the new US policy on the South African economy. The nearest anyone came to confront the reality of reinvigorating global growth in an environment characterised by limited macroeconomic policy space and heightened policy uncertainties, is IMF Managing Director Kristalina Georgieva, addressing the G20 Meeting.
“Uncertainty about economic policies is high,” she acknowledged. “Governments around the world are shifting policy priorities. There are significant policy changes in the United States, in areas such as trade policy, taxation, public spending, immigration, and deregulation, with implications for the U.S. economy and the rest of the world. Governments in other countries are also adjusting their policies. The combined impacts of possible policy changes are complex and still difficult to assess but will come into clearer view in the months ahead. Risks are also diverging. In the short-term, there is some upside potential in the U.S., where positive sentiment could boost activity. But overall risks are to the downside for most other economies, including the risk of policy-induced disruptions to the disinflation process or capital outflows from emerging market economies.”
Whether the Cape Town Consensus that emerged from the G20 Meeting becomes a reinforced antidote to the disruptive Trumpian playbook, only time will tell. Ramaphosa lost no time in reminding delegates that “the G20 was founded on the principle of cooperation. At this time of global uncertainty and escalating tension, it is now more important than ever that the members of the G20 work together. The erosion of multilateralism presents a threat to global growth and stability.”
A fair, transparent and inclusive rules-based international order, he added, is an essential requirement for economic stability and for sustained growth, and during times of heightened geopolitical contestation, it is important as a mechanism for managing disputes and resolving conflict.
Rebecca Grynspan, Secretary-General of UNCTAD, perhaps injected a dose of realism beyond the rhetoric of potential restorative do-gooding, and indirectly a riposte to the Trump doctrine, stressing that G20 cooperation is crucial to the world’s common future.
“G20 economic cooperation is more vital than ever in a world of low growth, soaring debt, high uncertainty, weak trade and low trust. Comprising the world’s major economies, the G20 represents 85% of world GDP, 75% of international trade and two thirds of the global population.” So, if it is not the shortage of funds, “the greatest risk to growth is our failure to imagine a common future. Our international financial architecture needs to adapt to raising challenges. But in doing so we must avoid fragmentation, embrace renovation and infuse a sense of urgency of action,” whether on debt restructuring and relief, climate finance and policy tools. “The question now isn’t whether we can afford sustainable investment, but whether we can afford its absence,” she maintained.
Perhaps the greatest challenge for the likes of the G20 and other international initiatives and agencies, is the perceived disconnect between their policies and outcomes, and the lived experience of millions of people who suffer as a consequence of the failure to deliver on a host of macroeconomic metrics of which the high cost of living, income and a spate of inequalities, corruption, high cost of finance, lack of climate action and gender parity are the key.
For most South Africans, GDP growth figures, FDI flows, inflation and so on are abstract constructs and meaningless. Their primary concern is whether they have enough money each month to make ends meet, to feed their families, educate their children, pay the utilities bills, and perhaps even have a few pennies to save.
How revealing that at the time when the GNU is precariously posturing as a potential exemplar of national cooperation and unity, no doubt supported by most South Africans and well-wishers abroad, that very ethos of the Cape Town Consensus based on cooperation and development sustainability, saw Eskom, the state electricity utility, unexpectedly clobbering a hapless citizenry by increasing its load shedding to the highest Stage 6, putting paid to the utility’s capacity and ability to deal with the country’s energy shortage crisis, despite the endless and empty positive utterances of ministers.
Not surprisingly, the IMF in its 2024 Article IV Consultation conclusion at the end of January, stressed that the outlook remains marked by high uncertainty, with the balance of risks tilted to the downside (both external and domestic), of which a rising public debt is the major concern.
Parker is an economist and writer based in London