G20 Action Plan in Response to the Covid-19 Pandemic
G20 Finance Ministers and Central Bank Governors met under the Saudi G20 Presidency on April 15th, 2020 and discussed urgent actions needed to address the global challenge presented by the COVID-19 pandemic (“COVID-19”). Concordantly, G20 Finance Ministers and Central Bank Communiqué dated April 15th, 2020 (“Communiqué”) is published virtually.
The Communiqué merely aims to present the immediate and exceptional measures to be taken internationally and domestically against the financial impacts of COVID-19. The Communiqué welcomes the important steps already taken by the International Monetary Fund (“IMF”), the World Bank Group (“WBG”) and other financial institutions (“IFIs”) to help countries in need.
Action Plan includes; (i) delivering a comprehensive IMF support package, implementing urgently the support proposed by the WBG and multilateral development banks, (ii) addressing debt vulnerabilities in low-income countries and (iii) enhancing coordination among international organizations to maximize their impact and optimize the use of resources.
I. G20 ACTION PLAN – SUPPORTING THE GLOBAL ECONOMY THROUGH THE COVID-19 PANDEMIC
The main goal of the Action Plan is to; protect lives, safeguard people’s jobs and incomes, restore confidence, preserve financial stability, revive growth and recover stronger, minimize disruptions to global supply chains, provide help to all countries in need of assistance and coordinate on public health and financial measures.
B. Health Response – Saving Lives
G20 members shall undertake the following actions and make the following commitments to support the health response:
- to fully comply with the International Health Regulations (“IHR 2005”) and the continued sharing of information between countries including on health measures and the effectiveness of non-pharmaceutical interventions;
- to close the financing gap in global health;
- to produce an evidence-based report highlighting the actions necessary and the financing gaps;
- to sport the designation of emergency trade measures to tackle COVID-19;
- to work with Health Ministers to address and mitigate the impacts of the COVID-19 pandemic and look forward to a joint meeting of Finance and Health Ministers in the coming months.
C. Economic and Financial Response – Support the Vulnerable and Maintain Conditions for a Strong Recovery
It has the utmost importance to provide bridges to households and businesses to ensure that COVID-19 do not cause long-term damage to domestic economies or global economy and also to provide, support to minimize the economic and social damage, restore global growth, maintain market stability and strengthen resilience by supporting jobs and household incomes.
By this reason, G20 members commit to;
- provide substantial support to businesses, especially small-medium sized enterprises, and households;
- supply targeted liquidity and funding support, to businesses and small-medium sized enterprises;
- support individuals and households to retain their attachment to the labor market
- providing support to individuals;
- promote financial inclusion by maintaining accessible and affordable financial products and services through conventional and responsible digital means while ensuring financial consumer protection;
- continue to put in place a comprehensive package of monetary and regulatory policy measures to support economic and financial stability;
- take the coordinated actions with central banks to help facilitate liquidity flows between economies;
- follow the Financial Stability Board’s (“FSB”) principles in its COVID-19 report to the G20;
- work together to deliver a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment and to keep our markets open;
- notify the World Trade Organization of any trade related measures taken;
- share country data, analysis and experiences on a timely basis on the implementation and impact of COVID-19 containment measures to support policy making.
D. Returning to Strong, Sustainable, Balanced and Inclusive Growth Once Containment Measures are Lifted
G20 members will work closely together to promote and sustain a successful global economic recovery. It will be critical for G20 members to work together to resume the path towards stronger, sustainable, balanced and inclusive economic growth over the medium term.
G20 members will undertake the following actions and commitments to secure strong, sustainable, balanced and inclusive growth, acknowledging that international cooperation is key to secure the recovery:
- The key lever in minimizing the economic disruption is to bring the spread of COVID-19 under control.
- G20 members will share the latest information and country experiences on COVID-19 containment measures, including the risk of secondary waves of infections.
- Tasked International Organizations (“IOs”)to support members in developing standardized data, analysis and sharing information on effective measures to restart economies.
- G20 members look forward to work by the G20 Trade and Investment Working Group to identify, longer term actions that should be taken to support the multilateral trading system and expedite economic recovery.
- G20 members committed to working across the G20 to share experiences and analysis to support the normalization of domestic support at an appropriate time.
- G20 members committed to support workers through active labor market, training and reskilling policies to minimize the loss of human and organizational capital. The International Labor Organization’s (“ILO”) and Organization for Economic Co-operation and Development’s (“OECD”) analysis on the impact on employment will be examined as requested by G20 Leaders.
- G20 members committed to re-double their efforts to enact policy measures to foster structural reforms, aimed at reviving and raising productivity over the medium term.
- G20 members committed to ensuring sustainable public finances and repairing government balance sheets to ensure they are sufficiently robust to address future shocks.
- G20 members committed to re-double their efforts to promote quality infrastructure investment and accelerate efforts to mobilize private sources of infrastructure financing, aimed at raising productivity, lifting growth and promoting job creation.
- G20 members committed to support an environmentally sustainable and inclusive recovery.
E. International support to countries in need
G20 members will undertake the following actions and commitments to help countries in need and uphold financial stability:
- G20 members support IMF’s crisis response package and welcome its readiness to mobilize its USD 1 trillion lending capacity. G20 members support the adoption of a Short-Term Liquidity Line, including a review in 2022, for members with very strong fundamentals and policies. G20 members also call on IMF to explore additional tools that could serve its members’ needs, drawing on relevant experiences from previous crises.
- G20 members reiterate their commitment to a strong, quota-based and adequately resourced IMF at the center of the Global Financial Safety Net (“GFSN”). G20 members remain committed to revisiting the adequacy of quotas and continuing the process of IMF governance reform under the 16th General Review of Quotas, including a new quota formula as a guide, by 15 December 2023.
- G20 members call for further progress to deepen the cooperation between IMF and regional financing arrangements (“RFAs”).
- G20 members call for a swift implementation of the emergency response packages adopted by the World Bank and Regional Development Banks. This amounts to more than USD 200 billion for emerging and low-income countries. G20 members will encourage Multilateral Development Banks (“MDBs”) to work closely together and with development partners at the country level to maximize the development impact.
- G20 members call for more contributions to replenish the Poverty Reduction and Growth Trust (“PRGT”) and the CCRT.
- G20 members support a time-bound suspension of debt service payments for the poorest countries that request forbearance. G20 members agreed on a coordinated approach with a common term sheet providing the key features for this debt service suspension initiative, which is also agreed by the Paris Club. All bilateral official creditors will participate in this initiative, consistent with their national laws and internal procedures.
- G20 members support enhanced policy and operational coordination across all relevant IOs, at multilateral, regional and country levels, to ensure resources get to where they are most needed and in a timely fashion. G20 members ask these IOs, in particular the IMF, World Bank and Regional Development Banks, to continue to work together and report back regularly.
- G20 members welcome the decisions by central banks to support global financial stability.
F. Lessons for the Future
The right investments, including in quality infrastructure, must be made so that we are better prepared for and able to weather future crises..
G20 members will undertake the following actions and commitments to prevent similar health, social and economic costs:
- G20 members commit to review, together with G20 Health Ministers, the forthcoming report by WHO and relevant organizations, on longer term pandemic preparedness gaps, to support their assessment of the G20 Presidency’s proposed pandemic preparedness global initiative.
- G20 members commit to build on G20 Infrastructure efforts to increase the resilience of infrastructure against risks, including from pandemics.
- G20 members commit to integrate the economic risks of pandemics, drug resistant infectious diseases, and high-impact tail risks more systematically into the G20’s global risk monitoring and preparedness.
The actions agreed by the G20 Finance Ministers and Central Bank Governors, will be reviewed regularly as the impact of the COVID-19 crisis unfolds. They asked the relevant IOs to help track the implementation of this plan, and any further updates to it, ahead of future G20 ministerial meetings. G20 members reiterate their commitment to use all available policy tools to achieve strong, sustainable, balanced and inclusive growth, and safeguard against downside risks.
II. ATTACHMENT-I TO THE ACTION PLAN – COVID-19 INTERNATIONAL SUPPORT TO COUNTRIES IN NEED
A. Delivering a Comprehensive IMF Support Package and Using Available Tools From RFAs
Because of the outbreak for a temporary period, the access limit to the IMF emergency facilities is doubled and this measure is aimed to provide financial support to the countries on urgent balance-of-payments needs. As well as the Flexible Credit Line (“FCL”) and the Precautionary and Liquidity Line (“PLL”) instruments, the IMF has a lending capacity of USD 1 trillion for the members by existing and new programs.
B. Implementing Swiftly the Support Proposed by the World Bank and Regional Development Banks
Measures taken by the Multilateral Development Banks encouraged in the Communiqué. More than USD 200 billion dedicated to financing the emerging and low-income countries.
In Communiqué, it is also pointed out MDBs will play a key role after the pandemic crisis and during the recovery process.
C. Providing Debt Service Suspension for the Poorest Countries
For emerging and low-income countries action plans already announces by the PRGT and the CCRT. According to Communiqué, G20 countries will support the time-bound suspension of debt service payments for the poorest countries that request forbearance. All bilateral official creditors will participate in this initiative, consistent with their national laws and internal procedures.
D. Ensuring Efficiency and Operational Coordination to Optimize the Use ff Resources
All national and international organizations (IMF, World Bank and Regional Development Banks etc.) will report regularly regarding the fate of the funds.
E. Welcoming the Actions Taken by Central Banks to Support Financial Stability
According to Communiqué the decisions by central banks to support global financial stability and resilience, including the deployment and expansion of bilateral swap lines and the introduction of repo facilities for sovereign debt, in line with their mandates.