How the COVID-19 response fared at the G-20

When finance ministers and central bankers from the G-20 group of nations met last week, they came to agreement on a number of global financial issues, including debt relief and a fiscal response to COVID-19.

But some global development advocates say they fell short on committing to improving coronavirus vaccine distribution.

“The biggest concern now is the lack of political will, political ambition, for the G-20 to tackle the vaccine distribution issue,” said Eric LeCompte, executive director at Jubilee USA Network. The pressure will be on the G-20 to agree on a process for global vaccine access at its October meeting — or risk what the International Monetary Fund has predicted could be a $9 trillion hit to the global economy, he said.

Some governments, such as Germany, have concerns about vaccine-related issues, including waiving intellectual property rights, LeCompte said. Many of those watching the meeting had hoped the G-20 would take action on vaccine production and distribution, given the consequences of a lack of global action. LeCompte said it was “baffling” that the group did not.

What the G-20 did say about vaccines in its final communiqué was vague. The group of wealthy nations expressed support for collaborative efforts around COVID-19 immunization, as well as efforts to diversify vaccine-manufacturing capacity and strengthen health systems. The group also committed to developing proposals for sustainable financing for future pandemic preparedness that it expects to review in a joint meeting of G-20 health and finance ministers in October.

There was some progress on debt relief, including G-20 support for a new $650 billion issuance of Special Drawing Rights by IMF. The group, however, stopped short of matching the commitment by the G-7 major industrial nations that wealthier countries reallocate $100 billion in SDRs to their lower-income counterparts.

The communiqué also included additional language about private sector participation in debt relief, which has been considered a challenge in negotiations to resolve debt issues related to the post-pandemic recovery.

“We stress the importance for private creditors and other official bilateral creditors of providing debt treatments on terms at least as favourable, in line with the comparability of treatment principle. We reiterate the importance of joint efforts by all actors, including private creditors, to continue working towards enhancing debt transparency,” the communiqué stated.

And for those reading closely, other language around COVID-19 relief in the statement appeared promising, LeCompte said.

To date, G-20 efforts to respond to the pandemic — notably the Debt Service Suspension Initiative and the Common Framework for Debt Treatments Beyond the DSSI — have been limited to low-income countries. Development advocates, civil society organizations, and struggling middle-income countries have been pushing the G-20 and other global organizations, including IMF, to broaden the group of countries eligible for support.

The communiqué several times refers to supporting “vulnerable” countries rather than just those that are low-income, potentially opening the door to expand programs to some middle-income nations that have been hit especially hard by the pandemic.

Governments agreed to avoid “premature withdrawal of support measures” and maintained commitments on exchange rates. The group also backed a recent agreement on international tax architecture that includes reallocating profits of multinational enterprises and an effective global minimum corporate tax.

The agreement’s changes for how digital companies can be taxed could raise revenues in lower-income countries, and together they are “one of the most exciting things to see move forward,” LeCompte said.

On climate, the G-20 agreed that “closer international coordination” was important and that governments should look at a mix of policies and tools while also providing “targeted” support for “the poorest and the most vulnerable.”

The vague agreement is unlikely to satisfy the group of vulnerable countries that met last week at the V20 Climate Vulnerables Finance Summit and called for the world’s wealthiest nations to live up to their pledge to provide $100 billion in climate finance each year.