TANZANIA – The U.N. chief on Thursday warned the largest gathering of world leaders since the coronavirus pandemic began that it will cause “unimaginable devastation and suffering around the world,” with historic levels of hunger and famine and up to 1.6 billion people unable to earn a living unless action is taken now.
Secretary-General Antonio Guterres also told the high-level meeting on measures to help low- and middle-income countries cope with fallout from the crisis that it could lead to “a loss of $8.5 trillion in global output — the sharpest contraction since the Great Depression of the 1930s.”
He called for immediate collective action in six critical areas: enhancing global financial liquidity; providing debt relief; engaging private creditors; promoting external finance; plugging leaks in tax evasion, money laundering and corruption; and adopting a recovery that tackles inequalities, injustices and climate change.
Nearly 50 world leaders spoke by video at the event along with economic experts, including the heads of the International Monetary Fund and the World Bank. But there were noticeable absences, among them the leaders of the world’s two largest economies — the United States and China, which are engaged in escalating tensions over the pandemic and other issues, and Russia.
China’s U.N. Mission said it didn’t participate “due to a scheduling conflict” and submitted a written statement. The U.S. Mission did not respond to requests for a reason why it did not speak. Guterres told reporters later that neither country could participate at a high level, but “there is a commitment from both the United States and China to be involved in this process which we very much welcome.”
Canadian Prime Minister Justin Trudeau, a co-host of the event, said the U.N. wanted to bring dozens of global leaders and finance experts together because “we need to think outside the box” in dealing with the pandemic.
European Commission President Ursula von der Leyen called for “a global recovery initiative” that links investment and debt relief to U.N. development goals for 2030, which include eliminating extreme poverty.
“Europe is ready to put on the table expertise and resources, with both traditional and innovative financing instruments,” she said. “But ... it should be a green recovery, a digital recovery, a just and resilient recovery.”
British Prime Minister Boris Johnson said the world must “build back better,” saying he believes “we can come through this crisis and achieve a strong, green and fair recovery.”
Guterres said the “unprecedented human tragedy” behind the 5.5 million cases of COVID-19 and more than 350,000 deaths has been coupled with a devastating economic impact that has spurred his call since March for a relief package equivalent to more than 10% of the global economy.
“Developed countries have announced their own relief packages, because they can,” he said. “But we have not yet seen enough solidarity with developing countries to provide them with the massive and urgent support they need.”
IMF Managing Director Kristalina Georgieva warned that recent data suggests the global economy will shrink even more than the 3% it had projected. She said that “in just two months investors pulled more than $100 billion out of emerging markets — more than three times larger than during the global financial crisis” in 2008.
Countries with weak economies and high debts from commodity exporters in sub-Saharan Africa to tourism-dependent small island economies in the Caribbean and elsewhere” are expected to suffer their worst economic performance in decades and a large decline in per capita income, Georgieva said.
World Bank Group President David Malpass said he worries April estimates that 60 million more people will be pushed into extreme poverty this year, raising the total toward 700 million, “will go higher."
South African President Cyril Ramaphosa, speaking on behalf of the African Union, called on developed countries to meet commitments and “be innovative.” He said developing country debts “are the foremost concern, especially to my continent, Africa,” which is calling for a debt standstill for two years and more IMF special drawing rights.
African leaders also support Gutteres’ call for economic relief worth at least 10% of global GDP, which would mean over $200 billion in additional support for Africa.
Fiji’s prime minister, Voreqe Bainimarama, warned that the pandemic’s economic impact is “widening the gap between the developing and developed worlds, between north and south.”
“As economies of small island states are left reeling, our tourism revenue is gutted, and our lending capacity is limited. We cannot go at it alone,” said Bainimarama, whose country relies on tourism for 40% of its economy.
Saying wealthy nations have already put $8 trillion into their own economies for pandemic relief, he added: “Even the equivalent of one-half of one percent of this was dedicated to all the world’s small island developing states, it would provide us with the vital support we need.”
Guterres said working groups comprising governments, economic experts and others will now consider urgent actions in the six critical areas and report to a ministerial meeting at the end of July.
French President Emmanuel Macron said the groups are “essential” to recommit “ourselves financially (and) ... by inventing other forms of cooperation.” He also stressed that “we must continue to innovate, again and again.”
Germany’s Chancellor Angela Merkel told the leaders: “I hope a clear signal of solidarity will go out from this conference.”
But she was cautious, saying Germany will examine at the end of the year whether further steps are needed on debt relief, and that IMF measures including additional special drawing rights “may be conceivable” to secure the financial liquidity of vulnerable countries.
Japan’s Prime Minister Shinzo Abe, another major economic power, said the government has just established an emergency loan program of approximately $4.5 billion over the next two years “to help maintain and revitalize economic activity in developing countries.”