Transcript

Transcript of October 2020 G-24 Annual Meetings Press Conference

October 13, 2020

Speakers:

Kenneth Offori-Atta, Minister of Finance Ghana

Marilou Uy, G-24 Secretariat

Gediminas Vilkas, Senior Communications Officer Communications Department, IMF

Mr. Vilkas ‑ Good afternoon and welcome to the IMF/World Bank Annual Meetings and, in particular, this Press Conference on G‑24 group meeting. My name is Gediminas Vilkas, and I am with the IMF Communications Department. I am pleased to introduce you to the Chair of the G‑24 group, Mr. Kenneth Ofori‑Atta, who is the Minister of Finance of Ghana, who will be giving the introductory remarks, and after that we will have a time for questions.

All the annual meetings this week and next week are virtual. Thank you very much for watching us online and submitting your questions online. The Minister will give his introductory remarks, and then you will have a time for questions. So without further ado, I give the floor to you, Minister. Please go ahead.

Mr. Ofori‑Atta ‑ Let me welcome you all to this press conference. You have our communiqué, so I can be brief. Emerging and developing countries are in different stages in containing the pandemic, but the economic impact has been immediate and severe for EMDCs overall. For the first time in decades, GDP growth in EMDCs is expected to be negative this year. Millions of people are losing their livelihood and falling into poverty.
Governments have been experiencing sharp revenues losses and capital outflows that have depleted fiscal resources and reserve buffers at a time when they are most needed. In several countries, sovereign debt distress is growing.

We appreciate the responses of international financial institutions, such as the IMF and WBG. That have “leaned in” on their lending in the past six months. G20 country creditors have also put in place the Debt Service Suspension Initiative (DSSI) that deferred around US$5 billion in debt service payments for more than 40 countries, so far. G‑24 Ministers and Governors at today's meeting further highlighted that external financial assistance still falls short of what is needed. Much more needs to be done. Major economies need to work together and use all policy tools available to help developing countries striving to contain the pandemic, fix the scars on their productive capacity and restore an inclusive economic growth.

In terms of specific actions, the following are laid out in our communiqué: The IMF, which is at the center of a strong Global Financial Net, should be adequately resourced and have sufficient lending capacity. We look forward to the timely and meaningful conclusion of the 16th General Review of Quotas that could reduce the Fund's reliance on borrowed resources and implement long‑awaited governance reforms.

In addition, countries that do not need their Special Drawing Rights (SDRs) should be able to channel them to countries that need them. A new SDR allocation, of which 40 percent will flow to developing countries, comes at little cost to taxpayers in major economies.

We seek further expansion of major central banks swaps and repo lines to more EMDCs and support for initiatives to scale up affordable market financing, which could be an important source of development financing.

We must address worsening debt vulnerabilities to avoid a debt crisis, beyond the DSSI. When debt cancellations or restructurings are necessary, a framework and mechanisms should be put in place to achieve expeditious and fair sovereign debt resolution involving official and private creditors. The IMF, WBG and development partners should urgently work on such a framework and find the means to provide exceptional financing to countries undergoing debt restructuring.

Multilateral Development Banks (MDBs), which can leverage their shareholders' capital multiple times, should have the resources to provide exceptional support over the medium term. Concessional new financing will be particularly critical to avoid prolonged damage to the development prospects of low‑income countries.

Multilateral cooperation is essential to contain illicit financial flows and reform international tax rules and practices that erode our tax bases, such as by designing a multilateral solution to tax digital activities that takes into account the concerns of developing countries.

And we worry about not having timely access to affordable vaccines, when they are available. We call for global coordination that will make affordable vaccines and treatments available to all countries, on the basis of need.

Finally, all these are feasible when compared to the scale of the global spending made so far in major economies. In these unprecedented times, strong international cooperation is more important than ever. It is urgent that advanced and developing countries work together now to shape an inclusive international financial architecture. With that, I open the floor for questions.

Mr. Vilkas ‑ Thank you very much. Let me also introduce the Director of G‑24 Secretariat, Marilou Uy, who just joined our press briefing. We had a couple questions coming to you Minister and also maybe to Marilou if she wants to address those.

The first question is on the main policy advice that G‑24 is giving to countries. So what are the main recommendations for the G‑24 countries to cope with economic challenges that the countries are facing because of COVID pandemic. Please, Minister, the floor is yours.

Mr. Ofori‑Atta ‑ Thank you. I think we had a very good discussion throughout the period. I think it is quite clear that the pandemic has sort of escalated our expenditures to member countries and our revenue line has also come down [inaudible]. I think the DSSI, as we see it, provides some short‑term liquidity opportunities, but that is [inaudible] to be standard a lot more. I think the real call to arms is that we should get more funding for the IMF and the World Bank and ensure that they work much faster than they do.

There is real concern going forward, we should look more towards growth than austerity and consolidation or economies will come to an unnecessary halt.

Mr. Vilkas ‑ Thank you, Minister. There is another question, a good segue, you talked about debt. There is also a question on debt. G‑24 support debt transparency. It seems that it is also supporting the G‑24 Debt Service Suspension Initiative. Is there any space for the private sector to go to this initiative, to go along with it and support with their own needs? What would G‑24 say to the private sector? Thank you.

Mr. Ofori‑Atta ‑ Well, I think if you look at our communique, we are very clear that the private sector should come to the table to participate in this unprecedented turn of events globally and, therefore, there is a need for us to sit at the table to look at restructuring of debt that EMDCs have. I think that is a challenge we need to take because these are unprecedented times, and I think in September we heard the first murmurs of default from Zambia, and I think all of this could be avoided if we can begin in real and honest discussions as to the cash flow capacity of all of these countries.

Mr. Vilkas ‑ Thank you, Minister. There is also one question related to Ghana, so this is coming to you, Minister, a question. What is your take on the economic outlook to Ghana given the latest update that IMF presented, and what are the main challenges Ghana is facing in this COVID‑19 environment?

Mr. Ofori‑Atta ‑ I think for Ghana, we started the year thinking about 6.8 percent growth, of which we got it down to 0.9. It looks like we might be able to be between 1 and 1.5 percent, and that is the best we can do. Our deficit moved from 4.9 to 11.4, which is putting quite a bit of strain on us because of our revenue situation. We expect, however, to move really quickly towards intervening for recovery, and we put together close to a $20 billion program to look at the Ghana case program, where they would be financed by government and 70 percent by the private sector, so that we pivot off this unfortunate situation and literally to take advantage to not to waste this pandemic.

Mr. Vilkas ‑ Thank you, Minister. I think we exhausted the questions. I do not see any more questions coming online. I think if Marilou would like to make any concluding statement just to sum up one of the main finding of the G‑24 meeting, then I think we can wrap up. Please, Marilou.

Ms. Uy ‑ The communique is quite clear about the major priorities, of the consensus priority of the member countries, particularly in the area of what could they do that would enhance their means to support an economic recovery. As the Minister said, the resources have been exhausted. Fiscal and liquidity is tight. The issue is how the international community can come together and support countries on time and sufficiently to go through the recovery.

On debt specifically, as mentioned, there really is a framework issue on the international, the sovereign debt resolution mechanism and architecture for sovereign debt resolution. As of now, case by case and voluntary creditors coming to the table might be difficult, so somehow here the IMF and other multilateral agencies should really take a look at how to improve the architecture for sovereign debt resolution. Thank you.

Mr. Vilkas ‑ Thank you, Marilou. We have one more, I think the last question that came in, and the question is from Reuters. He is asking, is there a risk that some countries do not take up the extended DSSI, if involvement of private creditors is also made a prerequisite, which then make it likely that the rating agency would call a default. So he is just asking about what should be done in this situation, so what countries should do.

Mr. Ofori‑Atta ‑ I think that is sort of the moral crux of what we are facing, given the extent of the pandemic, why should we all not sit together to avert this crisis. At this point, about 1.6 billion jobs globally are moving into a much more economic depression than they should be. When the private sector comes to the table, my suspicion is that we have not engaged them solidly enough, and we should do that.

We certainly also need to move the U.S. into the concentration of the SDRs so that more capital can come to the World Bank and the IMF. We need to get IDA‑19 to be re‑looked at, possibly even double it at this time to ensure resources for the World Bank.

So I think it is really going to take a really synchronized and coordinated effort by all parties so we do not get into a world of cascading defaults, but we are confident that the right noises are being made. I think the reality is dawning on most people, and I am confident that we will be able to extend the DSSI and that a new order will come into place by spring next year when we meet in Washington.

Mr. Vilkas ‑ Thank you, Minister. I think that was the last question, so thank you very much for joining us and all presenting the views of G‑24. Stay safe and well and thank you, Marilou, for joining us. Just for all who are watching online, stay tuned for all other events that IMF and World Bank is providing to you virtually online. On the media side, tomorrow morning, the Fiscal Monitor Press Briefing, and then at 10:00, 10:15 a.m., there is the Managing Director Press Briefing for all of you. Thank you very much. Stay safe and stay well.