Coronavirus: G20 leaders agree to inject $5 trillion into global economy

Riyadh - Leaders of the Group of 20

major economies pledged on Thursday to inject $5 trillion in

fiscal spending into the global economy to blunt the economic

impact of the coronavirus and "do whatever it takes to overcome

the pandemic."

Showing more unity than at any time since the 2008-2009

financial crisis that led to the G20's creation, the leaders

said they committed during a videoconference summit to implement

and fund all necessary health measures needed to stop the virus'

spread.

In a statement containing the most conciliatory language on

trade in years, the G20 leaders pledged to ensure the flow of

vital medical supplies and other goods across borders and to

resolve supply chain disruptions.

As many countries enact export bans on medical supplies, the

G20 leaders said they would coordinate responses to avoid

unnecessary interference.

"Emergency measures aimed at protecting health will be

targeted, proportionate, transparent, and temporary," they said.

The G20 leaders also expressed concern about the risks to

fragile countries, notably in Africa, and populations like

refugees, acknowledging the need to bolster global financial

safety nets and national health systems.

"We are strongly committed to presenting a united front

against this common threat," the G20 leaders said in a joint

statement following their 90-minute call.

Saudi Arabia, the current G20 chair, called the video summit

amid earlier criticism of the group's slow response to the

disease. It has infected more than 470,000 people worldwide,

killed more than 21,000, and is expected to trigger a global

recession.

Saudi King Salman, in opening remarks, said the G20 should

resume the normal flow of goods and services, including vital

medical supplies, as soon as possible to help restore confidence

in the global economy.

The group committed to national spending measures totaling

$5 trillion -- an amount equal to that pledged in 2009 -- along

with other large-scale liquidity, credit guarantee schemes and

other economic measures.

The President of the European Council Charles Michel participates in a video call of world leaders from the Group of 20 and other international bodies and organizations, to tackle the coronavirus pandemic and its economic implications. Picture: Charles Michel European Council Twitter Page via AP

World Health Organization Director-General Tedros Adhanom

Ghebreyesus was to address the G20 to seek support for ramping

up funding and production of personal protection equipment for

health workers amid a global shortage.

"We have a global responsibility as humanity and especially

those countries like the G20," Tedros told a news conference in

Geneva on Wednesday. "They should be able to support countries

all over the world."

In his remarks to the group, U.S. President Donald Trump

shared details of the $6 trillion in support the United States

is making available through legislation and increased Federal

Reserve liquidity, including $2 trillion in fiscal spending, and

spoke in support of multilateral action and coordination.

"He talked about working together and sounded more

supportive of multilateral coordination than ever before," said

one source who observed the meeting.

The meeting was not marred by acrimony, as was feared given

the ongoing oil price war between Saudi Arabia and Russia, and a

war of words between the United States and China over the

origins and handling of the pandemic, said the source, who was

not authorized to speak publicly.

Tedros told G20 leaders that the pandemic is "accelerating

at an exponential rate" and urged them to ramp up production of

protective gear for health workers and remove export bans.

Chinese President Xi Jinping, fourth from left, attends the G20 Extraordinary Virtual Leaders' Summit on Covid-19 via video link in Beijing. Picture: Pang Xinglei/Xinhua via AP

"Everyone realizes that it is essential to preserve jobs,

and to maintain trade flows, not disrupt the supply chains,"

said one Brazilian government official with knowledge of the

videoconference discussions.

No country advocated “total confinement” mainly because most

of the countries in G20 are not implementing such moves, the

official added.

Several participants called upon the G20 to play the same

role that it played in overcoming the 2008-2009 global financial

crisis, when member countries pledged to inject massive fiscal

stimulus and financial liquidity into the economy, the Brazilian

official said.

IMF RESOURCES

The G20 leaders also asked the International Monetary Fund

and the World Bank Group "to support countries in need using all

instruments to the fullest extent."

IMF Managing Director Kristalina Georgieva plans to ask the

Fund's steering committee on Friday to consider doubling the

current $50 billion in emergency financing available to help

developing countries deal with the virus, a source familiar with

the plans told Reuters.

French President Emmanuel Macron attends a videoconference with G20 leaders to discuss the coronavirus disease outbreak at the Elysee Palace in Paris. Picture: Benoit Tessier/Pool via AP

To boost global liquidity, Georgieva also asked G20 leaders

to back a Fund plan to allow member countries to temporarily

draw on part of its $1 trillion in overall resources to boost

liquidity. The IMF made a similar move in 2009 with a $250

billion allocation of Special Drawing Rights, its internal unit

of currency.

Georgieva gave no specific number in her statement, but

observers to the G20 meeting said an SDR allocation of up to

$500 billion could be needed.