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What the G20 Should Do Now

29 16 4
01.06.2020

LONDON – The time is right for G20 leaders to hold a second meeting to discuss measures to advance the implementation of the G20 Action Plan, and agree to a more strongly coordinated global response to the health, economic, and social emergencies we face. The G20 has demonstrated that it can bring people together around a common set of actions. What it decides next on the COVID-19 response will have a direct bearing on the future of the world economy.

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    Our world is at a critical moment. On May 30, the highest daily figure was recorded for new cases of COVID-19 worldwide. On every continent, countries are attempting to stop the transmission of the virus. Compared to pre-crisis levels, the International Labor Organization estimates a 10.5% decline in the number of hours worked, equivalent to the loss of more than 300 million full-time jobs. For the first time this century, global poverty is on the rise.

    Therefore, as we did a month ago, to emphasize the urgency of delivering immediate relief to countries facing the effects of an unprecedented, global crisis. The problems faced by the poorest countries in Africa, Asia, and Latin America demand immediate action, as do those confronting diverse middle-income economies. Taken together, these countries represent nearly 70% of the world’s population and approximately one-third of global GDP.

    The United Nations predicts that a worldwide recession would reverse three decades of improving living standards and plunge upwards of 420 million more people into extreme poverty. The World Food Program has estimated that 265 million of our fellow citizens are likely to suffer from crisis levels of hunger – an increase of 130 million over pre-pandemic levels. We are also hearing reports of the pressure on all health and other social services on which girls and women depend.

    Moreover, COVID-19 has caused the greatest education emergency of our lifetime: 1.5 billion children – 80% of all children – have been out of school. Many may never return. The majority are denied distance learning. Millions who no longer receive school meals are going hungry, while at the same time education aid is being reduced.

    Health

    The global economic and social emergency cannot end until we can bring the global health emergency to an end. And we cannot bring the health emergency to an end in any of our countries until we end it in all countries.

    We welcome the $8 billion pledged on May 4 for vaccines, diagnostics, and therapeutic development as recommended by the Global Preparedness Monitoring Board, and urge that these contributions be paid immediately and be fully monitored and reported. But much more needs to be done:

    • We need global coordination of the development, mass manufacture, and equitable distribution of a vaccine or vaccines to ensure that they are universally and freely available as quickly as possible.
    • We urge every G20 member to support in full the $7.4 billion replenishment on June 4 of Gavi, the Vaccine Alliance, which between 2021-25 will immunize 300 million children, saving up to eight million lives. While we fight COVID-19 we must not allow the resurgence of other infectious diseases.
    • Closer cross-border collaboration is essential to increase now and for the future the limited global supply of vital medical equipment, and to make testing accessible in every country.
    • Developing countries need immediate support from the World Health Organization and others to build up their health systems and capacities, as well as to improve their social safety nets.
    • G20 countries should support the UN’s appeal for support for refugees, displaced persons, and others who rely on humanitarian aid.

    The Economy

    We note not only the multiple obstacles faced by developed countries in returning to growth, but also the deteriorating economic and fiscal conditions faced by many emerging, middle- income, and developing economies. More than 100 countries have now approached the International Monetary Fund for help, and more are expected to do so.

    The IMF has said emerging markets and developing countries need $2.5 trillion to overcome the crisis, but only a fraction of that $2.5 trillion has so far been allocated.

    While we welcome the good intentions at the heart of the G20 Action Plan, concrete measures must urgently be agreed and be implemented in full:

    • Debt relief for the 76 International Development Association countries needs to be scaled up radically to include relief by bilateral, multilateral, and private creditors until the end of 2021, and operationalized urgently. Multilateral creditors must demonstrate that they are providing net new lending in response to the COVID-19 crisis. Time is running out for the voluntary process for private creditors coordinated by the Institute of International Finance, and a new binding approach now needs to be considered.
    • A dozen or more emerging-market countries may well run into debt-servicing problems in the coming year. The IMF should be mandated to convene relevant players and, through its debt-sustainability and policy analysis, to set broad parameters for resolution.
    • The G20 should agree that the $2.5 trillion in support will now be provided. This requires the IMF, the World Bank, and regional development banks to raise their lending and grant ceilings. The multilateral development banks (MDBs) will likely increase their outstanding loan portfolio from the current $500 billion to $650-700 billion over the next 18 months. Without further increasing the resources available to the........

      © Project Syndicate