G20 support to low-income countries: from emergency to long-term recovery

On Monday 14 and Wednesday 16 June 2021, members of the IFA working group met for the fifth official meeting under the Italian presidency of the G20 to discuss how to foster a sustainable, sustainable and inclusive economic recovery.

Since the outbreak of COVID-19 in February 2020, the G20 has worked hard to ease the burden of the crisis on the most vulnerable countries and to ensure that they have the financial resources to fight the pandemic and launch a rapid, inclusive and sustainable economic recovery.

Italy took over the presidency of the G20 in December 2020 and continued the important work launched by Saudi Arabia, while bringing members’ attention to the long-term financing needs of developing countries.

The main G20 workplace for these discussions is the International Financial Architecture Working Group (IFA WG). In fact, the IFA WG meets regularly to prepare the ground for decisions taken at ministerial level on issues related to debt sustainability and transparency, volatile capital flows and associated risks, and financing for development in low income countries.

During the Italian presidency of the G20, the IFA working group has already agreed to extend debt relief measures for low-income countries until the end of 2021 and has secured the support of a new general allocation. 650 billion dollars in special drawing rights.

This week, on Monday 14 and Wednesday 16 June, members of the IFA working group met virtually for the fifth time under the Italian presidency of the G20 to assess what additional measures can foster a sustainable, sustainable and inclusive economic recovery, while at the same time maximizing the impact of resources towards development objectives.

Members received an update on the implementation of the Debt Service Suspension Initiative (DSSI), including the efforts of Multilateral Development Banks (MDBs) to provide new financing to eligible countries. the DSSI, and on the activities undertaken within the framework of Common framework.

Members of the IFA working group learned about private sector initiatives to promote debt transparency, which would be crucial for improving long-term debt sustainability.

Financing for development and how to maximize its impact took center stage at yesterday’s meeting. Especially in a post-pandemic context, MDBs play a critical role in providing new affordable finance to support economic recovery and help achieve the Sustainable Development Goals. To this end, the IFA task force is paving the way for an ambitious package of measures to increase development finance and strengthen coordination among international financial institutions. The package includes the full support of the G20 to advance a rapid replenishment of IDA, the branch of the World Bank specializing in grants and concessional finance for the poorest countries. During this meeting, the IFA working group also discussed measures to optimize the balance sheet of MDBs and a possible revision of the capital adequacy frameworks of MDBs: both initiatives could free up additional resources for countries. low and middle income. G20 members also discussed coordinating MDBs to maximize their development impact. In particular, the IFA working group considered proposals to further improve policy-based lending and received updates from MDBs on country platforms.

Finally, the IFA working group also discussed capital account policies implemented in response to the COVID-19 pandemic and ways to promote domestic capital markets and local currency bond markets.

The IFA working group will meet again in September.

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