EDITORIAL-SG: Straits Times says: Crisis needs major global cooperation

But the signs so far are less than encouraging. The world’s two largest economies, the United States and China, have been at loggerheads through much of the crisis. Many countries have slapped export controls on such vital supplies as medical equipment, essential drug ingredients and food products. Even as the pandemic is raging, the US administration has suspended funding for the World Health Organisation, which serves, literally, as a lifeline, especially for developing countries. The most positive sign so far is that the Group of 20 (G-20) – the de facto steering committee for the global economy – has pledged its support for selected global initiatives to tackle the crisis. The most recent is its agreement to freeze government loan repayments for low-income countries till the end of the year, which will save these countries more than US$20 billion (S$28.5 billion). While this will be helpful, it is far from enough. With their foreign exchange earnings devastated and capital flight having depleted a significant part of their hard currency reserves, these countries need immediate cash relief.

The IMF, which has suddenly been deluged with requests for financial assistance from 80 of its 189 members, has pledged to triple its concessional lending. The G-20 must agree to replenish the Fund’s already stretched resources. The grouping must also approve a new allocation of the IMF’s special drawing rights – a reserve asset that would ease the financial strains facing the Fund’s members. In addition, countries, including those in the G-20, must roll back export controls on vital supplies. And the US Federal Reserve and other major central banks must extend their swap lines well beyond the G-20, to help as many countries as possible deal with hard-currency shortages. If the pandemic-induced global economic crisis is to be contained, the response must be global in scope too. At least for now, it is vital that countries suspend their differences and their nationalistic instincts, and act together.