Oil price fall allows states to 'reassess fiscal policies': G20

The recent sharp decline in oil prices will provide "some boost" to global growth and should allow states to "reassess" fiscal policies to sustain economic activity, the G20 leading economies said in a draft communique Tuesday.

"The fall in oil prices will provide countries with an opportunity to reassess their fiscal policies," finance ministers and central bank chiefs from the group said in their draft statement.

It said that fiscal policy "has an essential role" in building confidence and sustaining domestic demand.

World oil prices have plunged more than 50 percent since 2014

World oil prices have plunged more than 50 percent since 2014 ©David Mcnew (Getty/AFP/File)

At their meeting in Istanbul, the G20 have sought ways to boost faltering global growth against the background of the debt crisis in eurozone member Greece.

The statement did not specifically mention Greece, which is not a member of the G20.

While the oil price fall will cause some boost in global growth, the implications will be different for oil exporting and oil importing countries, it said.

The decline will increase the purchasing power of oil importing economies and "could exert downward pressure on inflation, though temporarily".

However, it said the outlook for oil prices remains "uncertain".

"We will continue to closely monitor developments in commodity markets and their impact on the global economy."

"In some countries, potential growth has declined, demand continues to be weak, the outlook for jobs is still bleak, and income inequality is rising," the communique said.

It said that growth in the global economy remains "uneven" and the recovery "slow" especially in the eurozone and Japan, as well as some emerging market economies.

"To this end, we will continue to assess major risks in the global economy and remain vigilant," the finance chiefs said.

They also warned of the risk of stagnation in some leading economies.

"Prolonged low inflation alongside sluggish growth and protracted demand weaknesses in some advanced economies may increase the risk of persistent stagnation."

It also said that global trade growth "continues to be low" compared to its pre-crisis averages.

They also committed to "deepen our cooperation" in the fight against terrorism financing by exchanging information and "freezing terrorist assets".

The communique urged "all countries to speed-up their compliance with the relevant international standards" in this respect.

It said the Financial Action Task Force (FATF) against money laundering and similar bodies should "put a specific focus on financing of terrorism".

They should also develop guidelines to improve the transparency of payment systems, in order to lessen the risk they are used for the financing of terrorism and money laundering, it said.

The G20 asked for a report by October on "proposals to strengthen all counter terrorism financing tools."

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