February 25, 2021
Concerted efforts to contain COVID-19 pandemic across the globe is paramount to a robust global economic recovery and indeed, has never mattered more than now. This is a moment made for action and for multilateralism, U.S. Treasury Secretary Janet Yellen wrote in a letter to G20 members on Thursday ahead of the G-20 Finance Ministers and Central Bank Governors meeting on Friday.
“For more than a year the global community has faced a historic challenge from the dual health and economic crises caused by the pandemic. COVID-19 does not have a nationality nor respect borders, and we continue to see its devastating impact on the health and well-being of our people, our economies, and the social fabric of our societies,” stated Yellen in her letter.
The U.S. Treasury Secretary underscored, “no one nation alone can declare victory over these crises,” and urged for a global consensus and support to boost equatable access to covid-19 vaccines for developing countries.
“A rapid and truly global vaccination program is the strongest stimulus we can provide to the global economy. Our response to the global economic crisis should be coordinated in a similar fashion. We must continue to provide economic support to our citizens, creating a bridge to the end of the pandemic and rebuilding our economies to be stronger and more inclusive,” Yellen reiterated in her letter.
Yellen’s enjoinment to her G-20 echoes that of the International Monetary Fund Managing Director Kristalina Georgieve’s message to member nations of the world’s top 20 economies and the international community to move swiftly to address the lack-off and slow access to Covid-19 vaccines in developing countries.
Among the issues on the agenda for the G20 finance ministers and Central Bankers to mull include the global economic recovery, threats from climate change and climate-related solutions, and how to support low income countries with debt relief through the G20’s Common Framework for Debt Treatments.
“Low-income countries have been particularly hard hit and face limited policy options to respond to the health and economic crises. Without further international action to support low-income countries, we risk a dangerous and permanent divergence in the global economy. International financial institutions, like the IMF and World Bank Group, have provided much-needed emergency support. They must continue to play a role in financing the global health response, supporting a green recovery, and addressing the debt vulnerabilities exposed by the crisis,” Yellen said in her letter. “[The U.S.] look forward to exploring ways to further strengthen their toolkits, including the World Bank and IMF’s concessional facilities.”
She added that “allocation of new Special Drawing Rights (SDRs) at the IMF could enhance liquidity for low-income countries to facilitate their much-needed health and economic recovery efforts. To make this tool effective, the G20 must work with a broad coalition of countries on a set of shared parameters for greater transparency and accountability in how SDRs are exchanged and used. We would also strongly encourage 020 members to channel excess SDRs in support of recovery efforts in low-income countries, alongside continued bilateral financing. We look forward to discussing potential modalities for deploying SDRs.”
The meeting, hosted virtually by the Italian government which assumed the G-20 presidency on January 1, is Yellen’s second major international event this month since she took the rein at the U.S. Treasury late last month. However, as a former Federal Reserve Chairwoman, she’s not new to the G-20 rodeo.
Earlier this week, Secretary Yellen spoke with her Italian counterpart, Itay’s Minister of Economy and Finance Daniele Franco and Ignazio Visco Governor of the Bank of Italy, separately, to covey U.S. continued support for a strong, balanced and inclusive global economy recovery.
Italy is one of U.S. top significant trade partners in Europe with bilateral trade at $103.112 billion in goods and services in 2019, according to recent data from the State Department.
During the earlier months of the Covid-19 pandemic last year, the U.S. provided $100 million in economic relief funds to the Italian government to help fund medical supplies and equipment needed to combat the covid-19 outbreak in the country. Italy was one of the first countries hardest hit by the pandemic, outside of China.
Speaking on the ongoing pandemic that has ravaged the global economy with dual health and economic crises, Secretary Yellen noted that the pandemic has accelerated global digitization and technological transition in the labor markets, hence the need for revision of old ways of doing things.
“We must invest in efforts to help people adapt to this increasingly digital world,” she explained. “The G20 should continue to support work on digital payments at the Financial Stability Board and standard-setting bodies. I believe we can improve the speed and efficiency of our payment systems while mitigating potential risks, including their use for malign and illegal activities. As we know, the changing global economy presents new challenges for corporate taxation. The United States is committed to the multilateral discussions on both pillars within the OECD/G20 Inclusive Framework, overcoming existing disagreements, and finding workable solutions in a fair and judicious manner.”
The G-20 Finance Ministers and Central Bank Governors follows similar meeting of the G-7 members earlier this month.