Saudi Arabia: Leading G20 on the Path to Global Economic Recovery
The rapid spread of the COVID-19 pandemic resulted in a global economic recession with economic activities coming to a standstill. Of late, the world has woken up to the reality of the new normal and gradually, the lockdowns are being eased and economic activities are slowly picking up pace. At the same time, the harsh realities of life in the developing and under-developed countries cannot be sidelined. Several measures have already been taken by the developed countries, aimed at easing their woes.
In its continued support to countries across the world, the Saudi Arabia-led grouping of the major economies, G20, pledged to use all available policy tools to combat the pandemic and boost the recovery of the global economy. This was announced recently in a virtual meeting of the group’s finance ministers and central bank chiefs.
Raising hopes of global economic recovery post the easing of lockdowns, the participants, in their statement, said that they will 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.
G20, in April this year, had announced a one-year debt standstill for the poorest nations of the world. But it seems, much more will be needed to neutralize the devastating impacts of the pandemic. To this end, the G20 ministers and bank chiefs, after the virtual meeting, said that they would consider a possible extension of the debt suspension initiative during the second half of 2020, which could bring some relief for the poorer nations.
According to the finance officials of the G20, 42 of the world’s 73 poorest countries have asked for a moratorium on debt repayments until the end of 2020 which approximately amounts to about $5.3 billion in deferred payments.
The extension of debt relief will be based on the course that the spread of the pandemic takes in the times to come, as well as on the recommendations of the World Bank and the International Monetary Fund (IMF) in this regard. IMF expects global GDP to fall by 4.9 percent this year due to a deeper contraction during lockdowns than what was anticipated previously. It said that it expects an uneven and partial recovery from the recession in 2021.
Global charities like Oxfam have opined that the relief measures will need to be continued well into 2022 for the mitigation and recovery to be successful. As per a report, 73 of the world’s poorest countries are required to pay $33.7 billion in debt repayments through the end of this year.
The recent meeting was held in the wake of the unabated spread of the pandemic across the globe and the resultant threat of a debt crisis, particularly for the developing countries.
The leaders unanimously agreed on the need to stay united and come up with several measures that are needed at this point in time which will help the poorer countries cope up with the continuing impact of the COVID-19 pandemic.