Group of 20 financial ministers and central bank governors agreed to develop a joint Action Plan in response to the COVID-19, it said an official statement on Monday (03/23) - Photo by Secretariat of G20

JAKARTA (TheInsiderStories) Group of 20 (G20) financial ministers and central bank governors agreed to develop a joint Action Plan in response to the COVID-19, it said an official statement on Monday (03/23). The videoconference lead by Saudi finance minister Mohammed Al-Jadaan.

In the discussions, he stressing the need to step up joint efforts and act decisively in a coordinated manner to safeguard the stability of the global economic and financial markets.  Since the last meeting, the global economic outlook has significantly deteriorated amid the spread of the pandemic, he adds.

He also highlighted that the G20 should be ready to undertake further emergency response to address the global crisis and set a vision for the medium and long-term actions that will foster a rapid recovery in the economy and catalyze the potential for stronger economic growth.

At the virtual meeting the financial leaders also discussed the preparation for the virtual G20 Leaders Summit to address the pandemic and the related economic and social impacts. The Group have conceded that the global economy is headed for a global recession and that ‘coordinated fiscal action’ is now warranted.

So far, 80 countries have approached the International Monetary Fund (IMF) seeking support to deal with the economic impacts of the coronavirus, said the managing director, Kristalina Georgieva, during the conference call.

She emphasized three points at the meeting. First, the outlook for global growth for 2020 its expecting negative. She noted, “A recession at least as bad as during the global financial crisis or worse. But we expect recovery in 2021.”

To get there, said Georgieva, its paramount to prioritize containment and strengthen health systems in every countries. The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be, she adds.

“We strongly support the extraordinary fiscal actions many countries have already taken to boost health systems and protect affected workers and firms. We also welcome the moves of major central banks to ease monetary policy. Even more will be needed, especially on the fiscal front,” she noted.

Second, the managing director said, advanced economies are generally in a better position to respond to the crisis, but many emerging markets and low-income countries face significant challenges. They are badly affected by outward capital flows, and domestic activity will be severely impacted as countries respond to the epidemic.

Based on the official data, investors have already removed US$83 billion from emerging markets since the beginning of the crisis, the largest capital outflow ever recorded, said Georgieva.

“We are particularly concerned about low-income countries in debt distress—an issue on which we are working closely with the World Bank,” said her.

Third, IMF and World Bank, she claimed, concentrating bilateral and multilateral surveillance on this crisis and policy actions to temper its impact. She assured, both will massively step up emergency finance and working closely with the other international financial institutions to provide a strong coordinated response.

“We are replenishing the Catastrophe Containment and Relief Trust to help the poorest countries. We welcome the pledges already made and call on others to join. We stand ready to deploy all our US$1 trillion lending capacity,” said Georgieva.

In addition, she noted, major central banks have initiated bilateral swap lines with emerging market countries. She adds, “As a global liquidity crunch takes hold, we need members to provide additional swap lines.”

by Linda Silaen, Email: linda.silaen@theinsiderstories.com