DUBAI: Business policymakers from the 20 most powerful countries in the world have urged their governments to adopt a “global action plan” — ranging from macroeconomic measures to food supplies — to tackle the economic crisis caused by the coronavirus pandemic.
The call was made in recommendations by the B20 group to G20 finance ministers and central bank governors who met by “virtual” conference under the Saudi presidency.
“It is now critical to put in place a global action plan to mitigate and limit the extent of the shock,” the businesspeople said.
“This should include short-term policy actions that support the system to stop converting a health crisis into an economic and financial crisis,” they added.
“This would help avoid a graver negative impact on the global economy and society. It is equally important not to lose sight of the post-crisis revival phase and to mitigate potential risks and unintended consequences arising from containment and relief measures.”
Earlier this month, rulers, presidents and government heads met in a digital forum organized by the Riyadh G20 secretariat to adopt a plan to tackle the pandemic. The B20 recommendations are designed to help implement those aims.
“COVID-19 has hurt the global economy by squeezing both supply and demand, causing an immediate shock to cash flows of businesses,” the B20 said.
“This in turn weakens lending institutions’ asset quality and solvency at a time when regulations are much tighter than before the 2008 financial crisis,” it added.
“The crisis also exposed the vulnerability of global trade supply chains for critical goods and services.”
The urgent need is for a globally coordinated response, the group said. “COVID-19 knows no boundaries, neither in terms of medical contagion nor economic impact,” it added, highlighting the impact the disease would have on the world’s most vulnerable economies.
The International Monetary Fund (IMF) has a role to play in providing support for countries that face heavily disrupted balance of payments problems, the B20 said.
It called for coordinated action by the IMF, the World Bank and central banks worldwide to provide dollar liquidity to finance global trade flows. Food and agricultural products have to be expedited, the B20 said.
Banks and other lending institutions have to be supported to protect citizens and small businesses, the B20 added, including via the use of government guarantees and recalibrating leverage ratios.
There were several recommendations on the need to sustain demand in consumer-led economies hit by the lockdown of large sections of their populations, as well as safeguarding employment through government subsidy of wages and relocation schemes.
The B20 asked leaders to “refrain from taking any protective measures (including tariffs and export restrictions) against WTO (World Trade Organization) rules that interfere with the global trade of goods and services, especially front-line medical and healthcare products and supplies.”
It also urged them to “enable continued global trade during the crisis via trade finance and needed investments” by extending existing export credit lines, and to allow “temporary” trade investments by relaxing trade finance rules.
The B20 said the “COVID-19 pandemic must be seized as an opportunity to join forces, to embrace innovation, and to prepare for a healthier, prosperous and more resilient future.”
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