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WRAPUP 1-G20 vows to do 'whatever it takes' to support global economy

Wed, 14th Oct 2020 17:47

* G20 agrees in principle on debt restructuring framework

* Extends official debt payments freeze for six months

* World Bank leader sees rising risk of disorderly defaults

* IMF chief says more global cooperation needed on vaccine

By Jan Strupczewski, Christian Kraemer and Andrea Shalal

BRUSSELS/BERLIN/WASHINGTON, Oct 14 (Reuters) - Financial
leaders from the Group of 20 major economies on Wednesday
underscored the urgent need to bring the spread of the
coronavirus pandemic under control, and vowed to "do whatever it
takes" to support the global economy and financial stability.

In a lengthy communique, G20 finance ministers and central
bank governors also agreed in principle for the first time on a
"Common Framework" to deal on a case-by-case basis with the
rising number of low-income countries facing debt distress.

That marks a significant step forward for China, which has
become a major creditor to poor countries in recent years, but
had balked at the prospect of writing off any debts, according
to sources familiar with the G20 deliberations.

The final draft of the communique, viewed by Reuters on
Wednesday during the annual meetings of the International
Monetary Fund and World Bank, said the officials would finalize
the new framework at an extraordinary meeting before G20 leaders
meet next month. An earlier draft had the ministers adopting the
framework, but officials were unable to reach agreement on that
step this week.

G20 officials also agreed to extend a freeze in official
bilateral debt payments by six months, given continued liquidity
pressure on low-income countries, and expressed disappointment
about the absence of private-sector creditors in the moratorium.

World Bank President David Malpass told G20 officials it was
critical to look beyond the G20's Debt Service Suspension
Initiative, which only defers payments but doesn't reduce them.

He said the urgency of the crisis - which threatens to leave
150 million more people in extreme poverty by 2021 - required
more forceful and quicker action on debt reduction for the most
indebted of the world's poorest countries.

"The recession in advanced economies is less severe than had
been feared, but in most developing economies, it has become a
depression, especially for the poorest," he said.

"It's urgent to make rapid progress on a framework because
the risk of disorderly defaults is rising," he said.

G20 leaders, recognizing the uneven and highly uncertain
outlook for the global economy, also pledged to continue to
address the disproportionate impact the crisis has had on women,
young people and other vulnerable segments of society.

IMF Managing Director Kristalina Georgieva told a news
conference that more international cooperation was needed to
work on a vaccine, and early progress could boost global income
by $9 trillion by 2025.

"Nine months into the pandemic, we are still struggling with
the darkness of a crisis that has taken more than a million
lives, and driven the economy into reverse, causing sharply
higher unemployment, rising poverty, and the risk of 'a lost
generation' in low-income countries," she said.

"A durable economic recovery is only possible if we beat the
pandemic everywhere," she said.

The IMF projects a partial and uneven recovery in 2021, with
global growth expected to reach 5.2%, but has warned that
significant risks remain, including the resurgence of the virus.

(Reporting by Andrea Shalal in Washington, Christian Kraemer in
Berlin and Jan Strupczewksi in Brussels; additional reporting by
Leigh Thomas in Paris and David Lawder in Washington
Editing by Chizu Nomiyama and Paul Simao)

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