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G20 Talks on Economic Crisis (20 July 2020)

G20 Talks on Economic Crisis (20 July 2020)

Context

G20 finance ministers and central bankers held talks recently aimed at spurring global economic recovery from a coronavirus-triggered recession amid growing calls to widen debt relief for crisis-hit poor countries.

Background

  • The virtual meet was hosted by Saudi Arabia.
  • The dignitaries pledged to ‘use all available policy tools to safeguard people’s lives, jobs and incomes’ as the coronavirus pandemic continues to wreak havoc on the global economy.
  • This was the third virtual meeting after the EU virtual meet and UN ECOSOC High-Level Segment meets to discuss and find the best way forward for the present economic crisis in the world due to COVID Pandemic.

Summary of the Debate

Key Takeaways from the Meeting

  • The dignitaries endorsed the G20 implementation of the G20 finance minister's action plan of 15 April 2020.
  • The following issues were discussed at the meeting:
    • Economic recovery
    • Health response
    • Sustainability of the recovery process
  • The virtual meet was about a coordinated response amongst all the G20 partners.
  • Financial Action Task Force (FATF): G20 members re-endorsed the commitment to make it effective and to monitor it very robustly to keep an eye out on new methods of terror financing and to clamp down on them
  • Discussion on Debt service suspension initiative: There are too many low-income countries which are unable to service their debt. About 5.3 billion dollars was to be deferred, for this, the World Bank, IMF, and other international financial institutions have to come together.
    • Private lender too needs to join hands and to take an active part in debt service suspension.
  • India’s Action on various points of the Action Plan: India rolled out 295 Billion dollars plan to take care of the various aspects of recovery from COVID pandemic:
    • Credit Response
    • Food and Cash DBT (Direct Benefit Transfer)
    • Support to the Micro, Small and Medium Enterprises (MSME), which form the backbone of Indian economy.

G20 Action Plan to Fight COVID-19

  • It covers healthcare, economic and fiscal responses.
  • It includes measures to ensure a return to a strong and sustainable global economy, the provision of support to countries in need.
  • Its objective is to protect lives, safeguard people's jobs and incomes, restore confidence, preserve financial stability, revive growth, and recover stronger.
    • It wants to minimize disruptions to global supply chains and provide help to all countries in need of assistance and coordinate on public health and financial measures.
  • 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 the global economy.
  • It is also launched to provide, support to minimize the economic and social damage, restore growth worldwide, maintain market stability, and strengthen resilience by supporting jobs and household incomes.
  • The G20 members will work closely together to promote and sustain a successful global economic recovery.

Role of G20 in this Crisis

  • G20 represents 85 percent of the global economy. It is a better platform to discuss how to create resilience, particularly among the least developed countries to ensure global demand continuously rises.
  • By diplomacy perspective having a virtual meet is a success in this crisis. It is not only the COVID crisis but also the period of multilateralism crisis.
    • Organizations like the United Nations, W.H.O, World Bank, European Union are facing problems.
    • G20 is not a formal organization and has no binding commitment on its members. It is a purely voluntary organization and this is the need of the hour, when all the nations have to help each other without having a national interest in the first place.
  • G20 is applying a fast-paced and innovative approach to solve the problems. Because of this IMF have also fast-paced proceedings of 80 Billion SDR to countries.
  • Challenge to G20: G20 countries are themselves going through an economic crisis and it is questionable how they would do for other countries on a voluntary basis.
    • In this time, there is a huge drain on the existing financial resources of the countries.
    • The country like Britain has rolled out a massive economic rejuvenation plan and at the moment it is unclear how they will find the initiative.
    • From China, nobody knows what kind of fiscal and monetary stimulus it will provide.
    • U.S.A has already pledged a massive amount of money for its economy.

India’s opportunity in the crisis

  • Each crisis comes out with its own challenges but also brings opportunities.
  • India has several advantages at this stage:
    • It is shifting to virtual diplomacy.
    • It has millions of English speaking citizens.
    • It is the global power of Information technology.
    • It is the largest democracy.
    • India is the chairman of the Executive Board of W.H.O.
    • Indian official is the overseas auditor of W.H.O.
    • The chief economist of IMF is Indian origin.
    • There are lots of Indians leading multinational companies all over the world.
  • As per the IMF report, India along with China will lead the global growth rate.
  • There is a global recession but relatively some countries are empowered to do little better and India is one of them

Way Forward

  • G20 is an excellent forum, instead of other multilateral platforms, where there is scope for greater coherence in taking action.
  • We have to take baby steps and take everyone along and only then will be all swim together

Main Points Made by the Guests

1.   Jayant Dasgupta, Former Ambassador, WTO

  • The dignitaries endorsed the G20 implementation of the G20 finance minister's action plan of 15 April 2020.
  • The following issues were discussed at the meeting: Economic recovery, Health response, Sustainability of recovery process.
  • The virtual meet was about a coordinated response amongst all the G20 partners.
  • We have to take baby steps and take everyone along and only then will be all swim together.

2.   Swaran Singh, Chairperson, Centre for International Politics, JNU 

  • Each crisis comes out with its own challenges but also brings opportunities.
  • India has several advantages at this stage.
  • As per the IMF report, India along with China will lead the global growth rate.
  • There is a global recession but relatively some countries are empowered to do little better and India is one of them

3.   Jitendra Nath Misra, Former Ambassador

  • G20 is applying a fast-paced and innovative approach to solve the problems. Because of this IMF have also fast-paced proceedings of 80 Billion SDR to countries.
  • G20 is an excellent forums, instead of other multilateral platforms, where there is scope for greater coherence in taking action.

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