G20 officials pledge to keep cooperating to bolster global economy

RIYADH/ISTANBUL

Finance officials from the Group of 20 major economies vowed on July 18 to continue using “all available policy tools” to fight the coronavirus pandemic and bolster the global economy, warning that the outlook remains highly uncertain.

G20 finance ministers and central bankers, in a communique issued after a virtual meeting on July 18, said the global economy would recover as economies gradually reopen, but said further actions were needed to ensure growth.

“We are determined to continue to use all available policy tools to safeguard people’s lives, jobs and incomes, support global economic recovery, and enhance the resilience of the financial system, while safeguarding against downside risks,” they said in statement after the meeting ended.

Turkish Treasury and Finance Minister Berat Albayrak said that G20 ministers and central bank governors evaluated the ongoing action plan to contain the adverse effects of coronavirus pandemic.

“The importance of not shutting down our economies totally and maintaining international trade and cooperation even in case of a second wave of COVID-19 [disease pandemic] was underscored,” he said in a tweet.

Kristalina Georgieva, the International Monetary Fund’s managing director, has warned that despite some signs of recovery, the global economy faces sustained headwinds, including the possibility of a second wave of COVID-19.

“We are not out of the woods yet,” Georgieva said in a message to G20 finance ministers, warning the pandemic was likely to increase poverty and inequality.

Sweeping shutdowns aimed at halting the spread of the disease have caused massive disruption to the global economy, and are hitting the world’s poorest countries hardest.

G20 finance officials said 42 of the world’s 73 poorest countries had requested a freeze in official bilateral debt payments through the end of the year, amounting to about $5.3 billion in deferred payments.

Reflecting concerns raised by the World Bank that China, a G20 member and the largest creditor to developing countries, was not participating fully, the officials urged all official bilateral creditors to implement the Debt Service Suspension Initiative (DSSI) fully and transparently.

They also “strongly encouraged” private creditors to participate on comparable terms, and said they would consider extending the debt standstill in the second half of 2020.

Private creditors had not received any formal requests from countries for debt service suspension under the G20 initiative, the Institute for International Finance (IIF) said on July 15.

“We encourage the private sector investors to participate in this, but we need to be very careful not to interfere on private agreements,” Saudi Finance Minister Mohammed al-Jadaan, term chair of G20 finance ministers, said in a press conference at the end of the meeting.

The officials also reaffirmed their commitment to resolving differences over how to tax digital services and reaching a broad, consensus-based solution this year.

They said they expected to see proposals on international tax reform by October, when they meet again.

“Fair taxation of international companies and large digital groups is more urgent than ever,” German Finance Minister Olaf Scholz said after the meeting.