The meeting on February 12 was the first discussion among finance ministers and central bank heads of the G7 (including the US, the UK, France, Germany, Italy, Canada and Japan) since the US elected a new government.
In the context of the COVID-19 pandemic has not cooled down, two main contents included promoting world economic recovery and coordinating to overcome challenges when many countries fell into a situation of exhaustion of revenue while public debt increased. In which, an outstanding initiative which has gained the interest and anticipation of the public is G7's plan to mobilise about US$500 billion to finance poor countries to cope with the COVID-19 pandemic.
G7 countries currently contribute about a quarter of the budget of the International Monetary Fund (IMF), so the above mentioned sharing plan is expected to receive the support of the IMF.
According to the roadmap, G7 financial leaders will seek internal consensus, especially a decision on a new Special Drawing Rights (SDR), then the plan will be discussed with the world's major advanced and emerging economiesat the meeting of the Group of Twenty (G20), scheduled for the end of February. After being agreed upon, the plan will be decided by the IMF, as early as April. IMF Managing Director Georgieva and other European countries supported G7’s idea.
In 2009, the SDR used to help poor and developing countries access capital of about US$183 billion to deal with the serious impacts of the global financial crisis. In the new support wave, African economies facing many difficulties, especially countries in the sub-Saharan Africa, will receive direct support of up to US$18 billion, with preferential loans under the SDR.
Along with the funding plan and support for the new fund allocation phase of the IMF, G7 countries also discussed the continuation of debt rescheduling, as a goodwill act to help poor countries to concentrate resources for the prevention and fight against the COVID-19 pandemic, support the people, and recover economic activity.
The G7 financial leaders’ meeting was motivated by the positive commitments from the new US administration. The US side affirmed its stance in support of multilateral cooperation and called on G7 countries to maintain and strengthen financial support packages to promote a strong and sustainable economic recovery.
The UK and Japan also support expanding economic “rescue” measures, in parallel with efforts to control the epidemic. G7’s standout view is efforts to soon restore the national economy, while supporting efforts of developing and low-income countries.
The new pledges of the group of rich nations are welcome, showing a willingness to share difficulties in the context of the global economic slowdown. The international community hopes and waits at the upcoming G7 Summit, positive commitments will be realised with specific support measures, so that poor countries can soon overcome difficulties, and join hands to restore the global economy.
