The Group of 20 major economies said on Tuesday that they would present a coronavirus action plan in two weeks to address the debt vulnerabilities of the poorest countries and deliver financial aid to emerging economies.
G20 finance ministers and central bank governors discussed in a videoconference how the International Monetary Fund and the World Bank could ease a lack of liquidity in emerging markets, which have seen an outflow of $83 billion in capital.
In addition, the G20 countries will work with the group’s Financial Stability Board, set up after the 2008 financial crisis, to coordinate regulatory and supervisory measures taken in response to the coronavirus.
Working groups are due to flesh out details of the plan before the group’s next meeting on April 15. That will come during the virtual Spring Meetings of the IMF and World Bank, whose leaders also participate in the regular G20 calls.
The G20 has been accused of being slow to respond to the outbreak, which is expected to trigger a global recession as governments impose curfews and shut shops, travel comes to a halt and manufacturing supply lines are disrupted.
Last week, leaders of G20 countries pledged to spend over $5 trillion to limit job and income losses from the outbreak, while working to ease supply disruptions caused by border closures.
The IMF and the World Bank have jointly called for urgent action by official bilateral creditors to suspend debt service payments for the most vulnerable countries, some of whom have also been hit hard by a plunge in oil prices.
FEARS FOR POOREST COUNTRIES
IMF Managing Director Kristalina Georgieva on Tuesday welcomed steps already taken by G20 countries, but said she remained “very concerned about the negative outlook for global growth in 2020 and in particular about the strain a downturn would have on emerging markets and low-income countries”.
“Our forecast of a recovery next year hinges on how we manage to contain the virus and reduce the level of uncertainty,” she told the meeting.
Georgieva last week said the global economy was already in recession and called for “very massive” spending to avoid a cascade of bankruptcies and emerging market debt defaults. She said emerging economies would need at least $2.5 trillion.
Georgieva said the IMF had adjusted its rules to allow its poorest members to invest in crisis response rather than repay the IMF’s Catastrophe Containment and Relief Trust, and urged other countries to expand that facility to $1 billion.
“I count on the G20 to help build consensus on a way forward for our poorest members,” she said.
The G20 leaders pledged last week to fund all necessary measures to stop the spread of the virus, which by Tuesday had infected around 800,000 people and killed around 39,000.
The also expressed concern about the risks to fragile countries, notably in Africa, and acknowledged a need to bolster financial safety nets.
On Monday, G20 trade ministers agreed to keep their markets open and ensure the continued flow of vital medical supplies, equipment and other essential goods.
The G20 comprises Australia, Canada, Saudi Arabia, the United States, India, Russia, South Africa, Turkey, Argentina, Brazil, Mexico, France, Germany, Italy, Britain, the European Union, China, Indonesia, Japan and South Korea.