KUWAIT CITY, Oct 15, (Agencies): In its revised forecast of real GDP cuts in 2020 for all member states of the Gulf Cooperation Council (GCC) except Saudi Arabia, the International Monetary Fund (IMF) sees an 8.1 percent contraction for Kuwait. Earlier in April, the IMF predicted a contraction of 1.1 percent for Kuwait.
Meanwhile, the IMF revised the expected contraction for United Arab Emirates (UAE) from 3.5 percent to 6.6 percent, from 2.8 percent to 10 percent for Oman, from 4.3 percent to 4.5 percent for Qatar, and from 3.6 percent to 4.9 percent for Bahrain.
Finance ministers and bank governors of the G20 group affirmed that the global economic activity is showing signs of recovery as our economies have been gradually reopening and the positive impacts of our significant policy actions started to materialize.
However, the recovery is uneven, highly uncertain and subject to elevated downside risks, they said at the conclusion of their meeting late Wednesday. “We reaffirm our determination to continue to use all available policy tools as long as required to safeguard people’s lives, jobs and incomes, support the global economic recovery, and enhance the resilience of the financial system, while safeguarding against downside risks,” they said in their final communique. “The G20 Action Plan, endorsed at our meeting on 15 April 2020, sets out the key principles guiding our response and our commitments to specific actions to drive forward international economic cooperation as we navigate this crisis and take steps to support recovery and achieve strong, sustainable, balanced and inclusive growth,” they noted. Recognizing that members are in different stages of responding to the crisis and that the global economic outlook continues to evolve, we endorse the updates to the G20 Action Plan (Annex I).
These updates will ensure that we promptly respond to the evolving health and economic situation. The global landscape continues to be rapidly transformed by economic, social, environmental, technological, and demographic changes, they added. “We will sustain and strengthen as necessary our efforts, considering the different stages of the crisis, to achieve strong, sustainable, balanced and inclusive growth, while making the most of current transformations in shaping the recovery, in a way consistent with our pre-crisis agenda.”
They reiterated commitment that the G20 Action Plan is a living document and to regularly review, update, track implementation of, and report on it. They also underlined the urgent need to bring the spread of the virus under control, which is key to supporting global economic recovery, and will take forward the commitments agreed at the G20 Finance and Health Ministers meeting on Sept 17, 2020.
Moreover, the officials affirmed that they will continue to facilitate international trade and investment and build resilience of supply chains to support growth, productivity, innovation, job creation and development. We will continue to take joint action to strengthen international cooperation and frameworks, they added.
Meanwhile, they noted that they will remain committed to continue working together to support the poorest countries as they address health, social and economic challenges associated with the COVID-19 pandemic. We remain committed to implementing the Debt Service Suspension Initiative (DSSI), allowing DSSI-eligible countries to suspend official bilateral debt service payments through end- 2020.
The preliminary reporting from the fiscal monitoring framework by the International Monetary Fund (IMF) and the World Bank Group (WBG) highlighted that, together with exceptional financing, the DSSI is significantly facilitating higher pandemic-related spending, they said. The IMF and WBG have also continued to work on their proposal of a process to strengthen the quality and consistency of debt data and improve debt disclosure. In light of the continued liquidity pressure, while progressively addressing debt vulnerabilities, we agreed to extend the DSSI by six months, and to examine by the time of the 2021 IMF/WBG Spring Meetings if the economic and financial situation requires to extend further the DSSI by another six months.
The affirmed that they will continue to closely coordinate its ongoing implementation to provide maximum support to DSSI-eligible countries. The officials also expressed their disappointment by the absence of progress of private creditors’ participation in the DSSI, and strongly encouraged them to participate on comparable terms when requested by eligible countries.
They welcomed multilateral development banks (MDBs) commitments of $75 billion to DSSI-eligible countries over the period between April-December 2020 alone, part of their $230 billion commitment to emerging and low-income countries as a response to the pandemic. While protecting their current ratings and low cost of funding, MDBs are encouraged to go further on their collective efforts in supporting the DSSI, including through providing net-positive flows to DSSI-eligible countries during the suspension period, including the extension period, they said. “We ask the MDBs to provide further details on the new resources provided to each eligible country.
Building on the proposal by the Organization for Economic Cooperation and Development (OECD) to host the data repository, we look forward to further update on the implementation of the Institute of International Finance (IIF) Voluntary Principles for Debt Transparency.” “Given the scale of the COVID-19 crisis, the significant debt vulnerabilities and deteriorating outlook in many low-income countries, we recognize that debt treatments beyond the DSSI may be required on a case-by-case basis.”
“In this context, we agreed in principle on a “Common Framework for Debt Treatments beyond the DSSI”, which is also agreed by the Paris Club. We look forward to the endorsement of the Common Framework by members, subject to their domestic approval procedures,” they said. They added that they will convene, ahead of the Riyadh G20 Leaders’ Summit in November 2020, an extraordinary G20 Finance Ministers and Central Bank Governors meeting where they will publish the Common Framework and also discuss outstanding issues related to the DSSI. They reiterated their commitment to ensure a stronger global financial safety net with a strong, quota-based, and adequately resourced IMF at its center, and will keep demands on IMF resources under close review.