Active G20 moves help global economy reverse “COVID-19 winds”

Wednesday, 2020-07-22 15:38:11
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Debt relief to poorer countries hit by the coronavirus pandemic is needed during this difficult period. (Photo for illustration: International Federation of Red Cross and Red Crescent Societies)
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NDO – The G20 is promoting various measures which have been recognised by the international community as helping revive the global economy in the current difficult period due to COVID-19.

The recent G20 Finance Ministers and Central Bank Governors Meeting issued a joint statement emphasising its commitment to using policy tools to reduce the risk of a world economy slump. In addition to resolving disagreements and reaching consensus on related issues in order to promote business operations, G20 members also agreed to extend debt relief to the poorest countries.

Under the chairmanship of Saudi Arabia, the country currently assuming the G20 Presidency, the online meeting of G20 financial and banking leaders took place amid the forecast of a grey future for the global economy. According to the International Monetary Fund (IMF), the world economy’s growth is forecast to decline by 4.9% in 2020, while the World Bank (WB)’s forecast is a decline of 5.2%. The COVID-19 pandemic has put the world economy in its most serious recession since the Great Depression of the 1930s. Global economic difficulties have led to a debt crisis in poor countries.

At an online meeting last April, the G20 and Paris Club countries agreed to extend debt relief to the poorest countries. The G20 urged the implementation of debt rescheduling for poor countries, considering it necessary to help them overcome the crisis. The G20 said that both borrowers and lenders should implement this initiative fully and transparently. Currently, the G20 has received a rescheduling request for loans totalling US$5.3 billion from 42 out of the 73 poorest countries in the world.

The G20 countries aim to use policy tools to protect people's lives, jobs and incomes, while supporting economic recovery and strengthening the global financial system. G20 banking and financial leaders discussed new international tax regulations for tech giants, such as Google, Facebook, Apple and Amazon, amid reports regarding their low tax rates. The G20 also pledged to continue negotiations on tax regulations to solve disagreements and maintain cooperation towards a modern, fair and sustainable international tax system.

On the sidelines of the conference, the B20 group associated with the G20 also met online with more than 500 business leaders around the world. Business representatives called for global cooperation to ensure that governments and businesses can cope with the next wave of COVID-19. The business community, regardless of whether they are private or public companies, has recognised the need to work together to protect workers and unify governments to keep the global economic "engine" running at a high level.

As the European economic leader at the recent G20 meeting, Germany pledged EUR3 billion in aid to help the world's poorest countries. The funds will be provided as long-term loans to the IMF's Poverty Reduction and Growth Trust (PRGT). Berlin said it would provide a total of EUR8.7 billion for international aid packages in 2020 and 2021. IMF Managing Director Kristalina Georgieva welcomed the "generosity" of Germany and called on other donors to make similar commitments. The IMF has previously received pledges totalling US$11.7 billion from Australia, Japan, Canada, France and the UK to complement the PRGT. However, the absence of the US, the world's No. 1 economy, in the efforts to help poor countries, made G20 members uneasy. This meeting is an opportunity for the G20 to urge its members to be more proactive in participating in efforts to revive the world economy.

The IMF warns that, despite some signs of recovery, the global economy still faces prolonged "backward winds", including new infection waves of COVID-19 that could lead to increased poverty and inequality. WB President David Malpass once said that some countries need to have their debts written off to avoid falling into a more prolonged "poverty trap". The commitments and actions that the G20 are promoting are highly appreciated by the international community and considered as necessary measures to help the global economy overcome the current difficult period, ensuring a strong recovery and sustainable growth.