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MNI POLICY: G20 Commits To Debt Suspension, Ample Liquidity

(MNI) WASHINGTON
By Ryan Hauser
     WASHINGTON (MNI) - The Group of 20 finance ministers and central bank
governors said Wednesday they would support the suspension of debt payments for
the poorest countries while working with the IMF and World Bank to prevent
liquidity problems from becoming a solvency crisis throughout the global
economy.
     "This pandemic has already taken a great toll on our people and their
economic well-being, and we are still faced with extraordinary uncertainty about
the depth and duration of this global pandemic," said Saudi finance minister
Mohammed Al-Jadaan, whose country is hosting the G20 meetings this year.
     Al-Jadaan said G20 members are working to prevent a "global depression" and
have already injected over USD7 trillion collectively into the global economy,
adding that these efforts "must continue and be amplified."
     He praised G20 members for having "attained consensus and a roadmap" for
the COVID crisis and the recent OPEC+ decision to decrease oil production, and
that the actions of the group today show they are committed to a globally
coordinated response. "We have seen nothing but a full commitment to cooperate,"
said Al-Jadaan.
     G20 members are also "looking forward to seeing more actions" from central
banks as the crisis unfolds, said Saudi central bank governor Ahmed Alkholifey,
adding that the recent easing of monetary policy has been unprecedented.
Al-Jadaan also praised the "extraordinary measures" taken by central banks to
extend credit swap lines and establish repo facilities.
     --Debt Moratorium
     Al-Jadaan said G20 members have started a "debt moratorium," effective
immediately, to give poor countries "breathing space" on payments. Al-Jadaan
said this action "means more countries don't need to worry about repaying, over
the course of about 12 months." The Saudi finance minister said the debt
forbearance would be "unconditional," though countries will still need to track
movements with the IMF.
     The communique released just before the press briefing said the G20 members
are "[calling] on private creditors, working through the Institute of
International Finance, to participate in the initiative on comparable terms.
     When asked about a timeline for possible debt cancelations for poor
countries this year, Al-Jadaan gave no reply.
     Al-Jadaan said the current plan by the G20 to address the economic downturn
is a "living document" and also mentioned that the G20 has not stopped working
with the OECD to "advance the digital taxation file" in light of ongoing
disputes, especially between the US and Europe, on transnational digital
taxation.
     Al-Jadaan also said G20 members have discussed SDRs and that "the IMF
should consider whatever tools it has." However, the communique released today
mentioned in a brief footnote that the G20 International Financial Architecture
Working Group "also discussed the possibility of an Special Drawing Right (SDR)
allocation or of countries that have excess SDRs granting or lending them to
countries that need them." The document said that "there was no consensus on the
issue."
--MNI Washington Bureau; +1 202 371 2121; email: ryan.hauser@marketnews.com
[TOPICS: M$E$$$,M$U$$$,MI$$$$]
MNI Washington Bureau | +1 202-371-2121 | jean.yung@marketnews.com
MNI Washington Bureau | +1 202-371-2121 | jean.yung@marketnews.com

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