Saudi Arabia’s Finance Minister Mohammed al-Jadaan attends the G20 Central Bank Virtual Meeting of Finance Ministers and Governors in Riyadh, Saudi Arabia, on March 31, 2020.
Xinhua News Agency
Saudi Arabia has pledged to protect its economy while increasing international cooperation as G20 policymakers face increasing pressure to mitigate the impact of the deepest global recession in decades.
“The world is still living through COVID-19 and there is a lot of uncertainty, but I am optimistic as always,” Saudi Arabia’s Finance Minister Mohammed Al-Jadaan told CNBC’s Hadley Gamble in concluding the Finance Ministers of the G20 and Central Bank Governors meet on Saturday.
“Saudi Arabia has endured an even worse oil crisis in the past and a worse geopolitical situation in the past,” he said. “We are recovering strongly, as this will be no exception.”
G20 central bank and finance chiefs met on Saturday and pledged to “use all available policy tools to safeguard people’s lives, jobs and incomes” as the coronavirus pandemic continues to wreak havoc in the global economy.
“We are looking at what is happening in the world,” said Al Jadaan, noting that the G20 group is prioritizing its efforts to support the global economic recovery and improve the resilience of the financial system.
“People are pushing for the reopening, but we must be cautious and careful because at the end of the day, people’s lives and livelihoods are what matter,” he added.
According to forecasts by the International Monetary Fund, the economy of Saudi Arabia, the largest in the Middle East, will contract by 6.8% this year. It is a sharper decrease than the 2.3% contraction estimated in April.
“In 2020, as in every country in the world, we are likely to see negative growth,” said Al Jadaan, adding that he expects the contraction in the Saudi economy to be “much smaller” than the IMF forecast.
“We are seeing a very healthy recovery, but we are watching and we want to see how things develop during the third quarter,” he said. “We will resist this and come out stronger.”
G20 prioritizes debt relief actions
Finance and central bank chiefs are being pressured to make economic progress amid the global pandemic. In reports released last month, the IMF forecast the world economy to contract 4.9 percent this year, while the World Bank said a 5.2% contraction was likely.
“Due to the continuing impact of the COVID-19 pandemic, the world economy is facing a deep recession this year, and a partial and uneven recovery is expected in 2021,” said IMF Managing Director Kristalina Georgieva.
With the pandemic forcing governments to tackle financing challenges with fewer fiscal resources, the World Bank and IMF have urged G20 leaders to extend the deadline for the Debt Service Suspension Initiative (DSSI), a program that allows poor countries to delay payments to better allocate their financial resources to fight the virus.
“When the COVID-19 crash began, we worked with G20 members to ensure that we respond and respond strongly. We know that the crash did not affect everyone equally, the most vulnerable countries have been hit hardest,” said Al Jadaan.
“That is why we responded very quickly by launching the DSSI, so that low-income countries can have a breather with debt suspension. We also work to close the financial gap in the global health sector, and we provided and promised more $ 21 billion to bridge that gap, “he added.
The G20 group said an estimated $ 5.3 billion has been requested to be deferred until Saturday by 42 developing countries, and there are likely to be more. The decision to extend the debt program will be made later in the year.
It occurs when the World Bank warns that debt burdens, which are already unsustainable for many countries, are increasing to “crisis levels” as poor countries combat rapidly increasing poverty rates, median incomes and the negative growth.
“The situation in developing countries is increasingly desperate. Time is short. We need to act quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said David Malpass, president of the World Bank Group.
G20 leaders are slated to meet for the conclusion of the summit in November.
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