BUENOS AIRES • Finance ministers from the world's 20 largest economies were concerned about the state of financial markets this year, and some of their work at the Group of 20 summit at the weekend focused on preparing for the eventuality of a downturn, said Finance Minister Heng Swee Keat.
"We have had a prolonged period of economic upturn. The question is, when is the downturn coming? And how do we prepare for that?" Mr Heng said in an interview with Singapore media on Saturday after the summit in Argentina, which he attended. Singapore was invited as chairman of Asean this year.
His comments harked back to the raison d'etre of the G-20 Leaders' Summit: It was born 10 years ago when leaders came together in an effort to prevent a worsening of the global financial crisis.
Mr Heng said that the finance ministers focused on three major areas, the first of which was short-term risk in the global financial system.
Apart from the risk of an upcoming downturn, Mr Heng said current trade tensions were also creating more uncertainty.
"We need to be prepared for corrections in the market. We need to look at what we need to do to work together," he said.
The second area of focus was on building a more resilient financial system with "safety nets" on a national, regional and global scale.
READY FOR THE WORST
We have had a prolonged period of economic upturn. The question is, when is the downturn coming? And how do we prepare for that?
FINANCE MINISTER HENG SWEE KEAT
"Now, after the global financial crisis, a lot of work has gone on to improve financial regulation and financial supervision, but there is still much more to be done," he said.
At the national level, leaders discussed how each country must ensure that it does not have significant mismatches in its borrowings and ability to repay loans, he said.
They also tackled how to take care of the interest rate changes and possible currency fluctuations that could create problems, particularly for emerging economies, he added.
At the regional level, countries also looked at ways to enhance collaboration. Mr Heng cited the safety net among Asean Plus Three members - Asean's 10 countries, plus China, Japan and South Korea - called the Chiang Mai Initiative Multilateralisation. It mobilises members' foreign reserves to assist members that face temporary financing problems in their balance of payments, and has a current size of US$240 billion (S$329 billion).
Mr Heng noted that Asean Plus Three finance ministers had very good discussions earlier this year on how to strengthen this programme, and on how they need to work together with the International Monetary Fund (IMF) to strengthen their coordination and improve responses should emergencies occur.
The G-20 ministers also discussed the role of the IMF as a global safety net, he added.
The third area listed by Mr Heng was developing the financial system to support structural changes in various economies.
He cited two key areas finance could be channelled into: Infrastructure - including making it more resilient to deal with climate change - and education, to prepare people for the changing nature of jobs.
The finance ministers looked at ways to attract more private capital into infrastructure projects, and at what every country must do to continue to develop its education systems and promote lifelong learning, he added.
"There is some strong interest in what Singapore is doing, in particular in our education system as well as in lifelong learning for adults under SkillsFuture," he said.