On Friday, world financial leaders are expected to agree to continue support measures for the global economy and seek to increase the resources of the International Monetary Fund so that it can help poorer countries fight the effects of the pandemic.
Finance ministers and central bank governors from the world’s top 20 economies, called the G20, held a video conference on Friday. The global response to the economic chaos caused by the coronavirus was high on the agenda.
In the first comments of a participating political decision maker, European Union Economy Commissioner Paolo Gentiloni said the meeting was “good”, with consensus on the need for a common effort on global COVID vaccinations.
“Avoid premature withdrawal of favorable tax policies” and “progress towards a digital and minimum tax agreement,” he said in a Tweet, signaling other areas of apparent agreement.
A press conference from Italy, which holds the annual presidency of the G20, is scheduled for 5.15 pm (1615 GMT)
The meeting comes as the United States is preparing $ 1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($ 3.63 trillion) to make its economies work despite the blockade. COVID-19.
But despite the large sums, problems with the global introduction of vaccines and the emergence of new variants of the coronavirus mean that the future of the recovery remains uncertain.
German Finance Minister Olaf Scholz warned Friday that the recovery was taking longer than expected and it was too early to restore support.
“Contrary to what was hoped, we cannot yet speak of a full recovery. For us in the G20 talks, the central task remains to guide our countries through the serious crisis,” Scholz told reporters before the virtual meeting.
“We must not scale back support programs too soon and too quickly. This is what I will also campaign for among my G20 colleagues today,” he said.
Hopes for constructive discussions at the meeting are high among the G20 countries because it is the first since Joe Biden, who promised to rebuild cooperation in international bodies, became president of the United States.
While the IMF sees the US economy return to pre-crisis levels later this year, it could take Europe until mid-2022 to reach that point.
Recovery is also fragile elsewhere: industrial activity in China grew at the slowest pace in five months in January, hit by a wave of internal coronavirus infections, and in Japan fourth-quarter growth slowed from the previous quarter. with new blocks that have clouded the prospects.
“The initially hoped-for V-shaped recovery now looks increasingly like a long U-shaped recovery. This is why stabilization measures in nearly all G20 states must be maintained to continue supporting the economy,” a G20 officer said.
But while richer economies can afford to spur an economic recovery by borrowing more from the market, poorer economies would benefit from being able to draw on credit lines from the IMF, the global lender of last resort.
To give itself more firepower, the Fund proposed last year to increase its war booty by $ 500 billion in the IMF currency called Special Drawing Rights (SDRs), but the idea was blocked by the then president. of the United States Donald Trump.
Scholz said the change of administration in Washington on January 20 improved the prospects for additional IMF resources. She pointed to a letter sent Thursday by US Treasury Secretary Janet Yellen to G20 colleagues, which she also described as a positive sign for efforts to reform global tax rules.
Civil society groups, religious leaders and some Democratic lawmakers in the U.S. Congress have called for a much larger $ 3 trillion in IMF resources, but sources familiar with the matter said they considered such a move unlikely. great for now.
The G20 could also agree to extend the debt service suspension for the poorest countries for another six months.