G20 Agrees on $1 Trillion Comprehensive Financial Support Package for Low-Income Countries

Hong Nam-ki Deputy Prime Minister "COVID-19 Exit Strategy Important... Fostering New Growth Engines in Non-Face-to-Face Industries"

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is attending the '2nd G20 Finance Ministers and Central Bank Governors Meeting' held via video conference at the Government Seoul Office Building on the afternoon of the 15th.

[Asia Economy Reporter Kwangho Lee] The Group of Twenty (G20) has prepared a comprehensive financial support package worth a total of 1 trillion dollars to assist low-income and vulnerable countries struggling due to the novel coronavirus disease (COVID-19). They also agreed to provide support for health, businesses, and finance, and to grant debt repayment relief on official bonds.

Saudi Arabia, the G20 chair country, held the 2nd G20 Finance Ministers and Central Bank Governors Meeting via video conference on the 15th (Korean time) and reached an agreement on these matters.

The meeting was attended by finance ministers and central bank governors from G20 and invited countries, as well as representatives from major international financial institutions such as the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the World Bank (WB), and the Financial Stability Board (FSB).

During the meeting, countries exchanged views on the IMF’s global economic outlook and policy responses, and held in-depth discussions on the 'G20 Action Plan for COVID-19 Response' agreed upon at last month’s G20 Special Leaders’ Summit.

IMF Managing Director Kristalina Georgieva explained, "The global economy is expected to worsen significantly this year (-3.0%) but rebound next year (5.8%). There is great uncertainty depending on whether the pandemic ends in the second half of the year and the effectiveness of policies. We are preparing all available measures."

Recognizing the severity of the future economic situation, countries agreed to continue efforts to expand health systems, mitigate economic shocks, and cooperate on virus containment, vaccine development, and support for vulnerable countries.

In particular, G20 finance ministers agreed that to overcome this unprecedented crisis, they must produce a concrete action plan to send a strong signal to the market. They gave final approval to the action plan prepared through joint work by three G20 working groups.

The G20 Action Plan covers both health and the economy, consisting of five major areas: short-term tasks including epidemic response, economic response, and international finance, as well as medium- to long-term tasks such as sustainable growth recovery and future preparedness after the end of COVID-19.

Based on a total lending capacity of 1 trillion dollars, the G20 prepared a comprehensive financial support package and decided to expand IMF support tools. Additionally, they agreed on a support plan worth 200 billion dollars centered on the WB and regional development banks (RDBs) to assist low-income countries. Through this, investments in health and medical sectors, emergency fiscal support, and support for businesses and financial institutions in low-income countries will be implemented.

Debt repayments for low-income countries will also be deferred. Debt repayments on all official bonds held by International Development Association (IDA) and Least Developed Countries (LDCs) (IDA countries plus Angola, totaling 77 countries) will be deferred until the end of the year, with renewals also permitted.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, evaluated, "This action plan contributed to establishing a tangible foundation for the effective implementation of summit agreements and the restoration of market confidence."

He added, "As a co-chair country of the International Financial Architecture (IFA), leading the agreement on a concrete financial support package and debt relief measures for global financial stability recovery and support for low-income and vulnerable countries is a significant achievement."

Deputy Prime Minister Hong also proposed, "An exit strategy that can find a balance between epidemic control and economic response is important," and emphasized, "We will actively foster the non-face-to-face industry, which has rapidly emerged due to this crisis, as a future growth engine."

The G20 finance ministers adopted a joint communiqu? calling for mobilizing all available policy tools and resources to support economic recovery and maintain financial stability.

This content was produced with the assistance of AI translation services.