G20 officials to virtually convene
G20 finance ministers and central bank governors will meet over videoconference today.
Today’s meeting will address the coordination of recovery plans and aid to low-income countries. Specifically, G20 members will look to counter the risk of divergence in the recovery of economies that lack and possess access to vaccines. A new allocation of $500 billion in Special Drawing Rights (SDRs) from the IMF to cover health needs will be on the agenda. Such an allocation, if supported by the G20, will have every chance of being adopted at the IMF’s spring meeting being held in April. This initiative, to which 76 countries are eligible, currently runs until June 30 but could be extended to the end of the year.
Expect high-income countries to shift their SDRs to the IMF to enable it to extend low-interest loans to low-income countries, many of which were highly exposed to a sharp drop in commodity prices and a contraction in international trade. This shift represents an opportunity for G20 nations to show solidarity with developing countries while obtaining a return on investment based on SDR interest rates. Still, though countries like Zambia, Chad and Ethiopia have called for debt restructuring, fears of credit-rating downgrades could deter low-income countries from participating.
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