G20 finance ministers meet amid deep recession fears

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Saudi Arabia hosted virtual talks between G20 finance ministers and central bankers Wednesday amid warnings of a deep coronavirus-triggered recession and growing calls for debt relief for poor countries including in Africa.

The meeting comes a day after the Group of Seven (G7) nations expressed support for a temporary halt to debt payments from the world’s poorest countries to help them weather the pandemic — if G20 governments agree.

Ministers and bankers from the 20 most advanced economies had pledged in their previous meeting last month to address the debt burden of low-income countries and deliver aid to emerging markets hit hard by the pandemic.

G20 working groups are expected to outline details of the plan in the meeting on Wednesday.

The remotely accessed talks come after the IMF warned on Tuesday that the pandemic is pushing the global economy into its deepest recession in a century, cutting world output by three percent this year, with the potential for an even worse outcome.

The downturn will slash 9 trillion from the world economy, IMF chief economist Gita Gopinath told reporters.

As concerns mount for poorer countries without access to capital markets or adequate health facilities, 18 European and African leaders called for debt relief as well as a stimulus package of at least 100 billion for Africa.

“Only a global victory that fully includes Africa can bring this pandemic to an end,” the leaders — from France and Italy to Ethiopia and Kenya — wrote in a joint letter published in London’s Financial Times on Tuesday.

“We must instate an immediate moratorium on all bilateral and multilateral debt payments, both public and private, until the pandemic has passed.” Calls for debt forgiveness have been growing, including from Pope Francis and French President Emmanuel Macron, as poor countries need to lift spending on health care to confront the pandemic.

The International Monetary Fund on Monday approved a six month standstill on debt payments from 25 nations, mostly in Africa.

French Finance Minister Bruno Le Maire has announced that the G20 nations and the Paris Club of wealthy nation creditors have agreed to a one-year moratorium on debt payments for poor nations.

He said G20 and Paris Club nations, which includes all G7 members, had agreed on the moratorium for 76 nations, including 40 in sub-Saharan Africa.

Le Maire said the agreement so far includes the postponement of 20 billion in payments to bilateral and private creditors.

Another 20 billion in payments to multilateral institutions, mostly to the World Bank, is still awaiting a decision.

Following the G20 talks, G7 nations will hold a teleconference on Thursday chaired by US President Donald Trump.

Britain said it will be represented in those talks by Foreign Secretary Dominic Raab, who will push for coordination on the economic response as well as “G7 action to support vulnerable countries”.

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