MNI POLICY: G20 Commits To Debt Suspension, Ample Liquidity

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

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