Published: 09:53, March 27, 2020 | Updated: 05:46, June 6, 2023
COVID-19: G20 leaders to inject US$5t into global economy
By Xinhua

This photo taken and provided by the press office of Palazzo Chigi on March 26, 2020 shows Italian Prime Minister, Giuseppe Conte taking part in a video conference of an extraordinary meeting of G20 leaders, from the Chigi Palace in Rome. (HANDOUT PHOTO / PALAZZO CHIGI PRESS OFFICE / AFP)

RIYADH/WASHINGTON - Leaders of the Group of 20 major economies pledged on Thursday to inject over US$5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic”.

Showing more unity than at any time since the G20 was created during the 2008-2009 financial crisis, the leaders said they committed during a videoconference summit to implement and fund all necessary health measures needed to stop the virus’ spread.

“The G20 is committed to do whatever it takes to overcome the pandemic,” along with the World Health Organization and other international institutions, they said.

“The G20 is committed to do whatever it takes to overcome the pandemic,” along with the World Health Organization and other international institutions, G20 leaders said

Their statement contained the most conciliatory G20 language on trade in years, pledging to ensure the flow of vital medical supplies and other goods across borders and to resolve supply chain disruptions.

But it stopped well short of calling for an end to export bans that many countries have enacted on medical supplies, with the G20 leaders saying their responses should be coordinated to avoid “unnecessary interference.”

“Emergency measures aimed at protecting health will be targeted, proportionate, transparent, and temporary,” they said.

The G20 leaders also expressed concern about the risks to fragile countries, notably in Africa, and populations like refugees, acknowledging the need to bolster global financial safety nets and national health systems.

“We are strongly committed to presenting a united front against this common threat,” the G20 leaders said their statement.

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Saudi Arabia, the current G20 chair, called the video summit amid earlier criticism of the group’s slow response to the disease. It has infected more than 500,000 people worldwide, killed almost 24,000, and is expected to trigger a global recession.

Saudi King Salman, in opening remarks, said G20 countries should resume the normal flow of goods and services, including vital medical supplies, as soon as possible to help restore confidence in the global economy.

The group said it was “injecting over US$5 trillion into the global economy, as part of targeted fiscal policy, economic measures and guarantee schemes” to blunt economic fallout from the pandemic.

The amount is about the same as G20 countries injected to prop up the global economy in 2009. But a US relief bill is pledging US$2 trillion in fiscal spending, more than double its commitment from that crisis.

US President Donald Trump said later the videoconference showed “tremendous spirit to get this over with.”

He said at a White House news briefing on the coronavirus that the G20 countries were keeping each other informed about their efforts to fight the crisis.

“We’re handling it a little bit in different ways but there is great uniformity,” Trump said.

Trump and French President Emmanuel Macron agreed in a call on Thursday on the importance of cooperation through the G20 and other groupings to help international organizations “eliminate the pandemic quickly and minimize its economic impact,” the White House said.

Pledge of joint action

The meeting displayed little acrimony despite an oil price war between Saudi Arabia and Russia, an observer to the meeting said.

“Everyone realizes that it is essential to preserve jobs, and to maintain trade flows, not disrupt the supply chains,” said one Brazilian government official with knowledge of the videoconference discussions.

No country advocated “total confinement,” mainly because most of the countries in G20 are not implementing such moves, the official added.

To boost global liquidity, the IMF chief asked G20 leaders to back an IMF plan to allow member countries to temporarily draw on part of its US$1 trillion in overall resources to boost liquidity

While the group pledged joint action, the leaders’ statement lacked the urgency of the 2009 effort, said Mark Sobel, a former US Treasury and International Monetary Fund official.

“It’s endorsing what’s already being done in various countries but it isn’t offering a multilateral, global vision.” said Sobel, now affiliated with the Center for Strategic and International Studies in Washington.

The G20 leaders also asked the International Monetary Fund and the World Bank Group “to support countries in need using all instruments to the fullest extent.”

IMF Managing Director Kristalina Georgieva plans to ask the IMF’s steering committee on Friday to consider doubling the current US$50 billion in emergency financing available to help developing countries deal with the virus, a source familiar with the plans told Reuters.

To boost global liquidity, Georgieva also asked G20 leaders to back an IMF plan to allow member countries to temporarily draw on part of its US$1 trillion in overall resources to boost liquidity. The IMF made a similar move in 2009 with a US$250 billion allocation of Special Drawing Rights, its internal unit of currency.

Despite IMF's US$1 trillion financial capacity and its close work with the World Bank and other international financial institutions, Georgieva said the challenge was "enormous."

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"Exceptionally large number of countries" simultaneously require IMF emergency financing, emerging markets are "dramatically impacted" by record high capital outflows and severe shortage of foreign exchange liquidity, and many low income countries step into this crisis "under a high burden of debt," she said.

Georgieva gave no specific number in her statement, but observers to the G20 meeting said an SDR allocation of up to US$500 billion could be needed.

The IMF chief lauded the "extraordinary steps" taken by G20 leaders to save lives and safeguard economies, especially highlighting the targeted fiscal support to vulnerable households and to large and small businesses, so that "they can stay afloat and get quickly back to work."

"Such support will accelerate the eventual recovery, and put us in a better condition to tackle challenges such as debt overhangs and disrupted trade flows," Georgieva said.

"We will get through this crisis together," she said. "Together we will lay the ground for a faster and stronger recovery."

On the health response, the G20 leaders committed to close the financing gap in the WHO’s response plan and strengthen its mandate as well as expand manufacturing capacity of medical supplies, strengthen capacities to respond to infectious diseases, and share clinical data.

WHO Director-General Tedros Adhanom Ghebreyesus addressed the G20 to seek support for ramping up funding and production of personal protection equipment for health workers amid a global shortage.