The biannual meetings of the G20, of which Saudi Arabia is a member, have become major events in the global economic calendar. What started in 1999 as an informal gathering of central bankers and finance ministers has become the principal forum by which the world’s leading economies have sought to prevent worldwide economic crises. Its work following the 2007-08 global financial crisis, which included the establishment of a new Financial Stability Board to drive regulatory reform across G20 jurisdictions, raised the profile of the organisation to the level of consideration it enjoys today. Between them, the G20 countries represent around 66% of the global population and 85% of its economy.
The G20 meetings also function as a crisis prevention and mitigation arena. This was the case at the G20 gathering in Seoul, South Korea in 2010, when finance ministers attempted to defuse the currency war between the US and China, and in St Petersburg, Russia in 2013 as the organisation struggled to find a common response to the conflict in Syria. More recently, the 2019 meeting in Osaka, Japan provided an opportunity for G20 nations to address concerns regarding global protectionism in the shadow of a trade war between China and the US.
Saudi Arabia’s importance within the global economy has meant that it has been a participant in the G20 meetings from the outset, and in December 2019 the country assumed the G20 presidency, the high point of which will be the Leaders’ Summit in Riyadh in November 2020. The Kingdom will therefore play the leading role in deliberations as the global economy navigates the twin challenges of the Covid-19 outbreak and steep decline in oil prices.
Regional Agenda
As with all G20 summits, the 2020 event will cover a wide range of economic and social issues. The Kingdom has grouped these into three main focus areas. Under the theme of empowering people, leaders will explore boosting the financial inclusion of women and young people, breaking down employment barriers and establishing a patient-centric health care system. The second theme involves safeguarding the planet, with a focus on exploring cleaner and more sustainable energy systems, reforestation, improving global water management and reducing food loss. The third focus area aims to tackle global tax challenges arising from digitalisation, cybersecurity, financial technology, the development of smart cities and the use of technology in infrastructure.
Given that the November event is to be the first G20 summit to be held in the Arab World, it is unsurprising that a number of the region’s principal challenges are prominent within the agenda. These include the difficulties faced by regional governments with youth unemployment, and the issues of inward investment and sustainable energy.
Practical Changes
Precisely what effect the Covid-19 pandemic will have on the November agenda remains to be seen. In the short term, a number of practical changes are likely, with the preparation phase for the November summit facing the most obvious disruption, as a result of travel restrictions introduced across the globe. This period usually involves numerous physical meetings between government officials and representatives of civil society, organised along three tracks. The so-called Sherpa Track prepares the ground for the summit’s discussion on socio-economic issues in health care, education, anti-corruption, tourism and the digital economy; the Finance Track brings Saudi Arabia assumed the G20 presidency in December 2019, the high point of which will be hosting the Leaders’ Summit in Riyadh in November 2020 together central bank governors and ministers for preliminary discussions regarding core areas such as monetary and fiscal policy, international taxation and financial inclusion; and the Engagement Groups Track provides an opportunity for civil society groups to feed their ideas into the G20 process. The latter track will be led by Saudi think tanks, women and youth organisations, labour bodies, and scientific bodies, all of which will work with their G20 counterparts to develop policy recommendations to be submitted at the main summit. In this way, the Kingdom’s influence over the global social and economic agenda will be exerted not only by the government but also various components of civic life.
Action Plan
Ensuring that the effects of the Covid-19 pandemic do not diminish the Kingdom’s ability to leverage the international platform is a key challenge for the government, and one that is already being tackled through the deployment of teleconferencing technology.
The G20’s first virtual meeting took place on March 26, 2020, with King Salman bin Abdulaziz Al Saud making the opening remarks. Addressing the global response to the Covid-19 crisis, King Salman called on G20 members to “strengthen cooperation and coordination in all aspects of the adopted economic policies.” This included the safeguarding of trade relationships, by “resuming, as soon as possible, the normal flow of goods and services, especially vital medical supplies.”
Central bank governors and G20 finance ministers met online a few days later, at the end of March 2020, to follow up on King Salman’s talking points by establishing a roadmap for future actions. Among the commitments made during the virtual meeting, involved parties agreed to establish a joint G20 action plan, address the risk of debt vulnerabilities for low-income countries, work with international organisations to mitigate the effects of the global economic slowdown, and cooperate with the Financial Stability Board in its capacity to coordinate regulatory and supervisory measures taken by countries in response to the Covid-19 pandemic.
Cost Implications
While the preparatory stage for the 2020 G20 summit can be taken online, the November summit remains a concern for government planners. Based on previous events, Jadwa Investment, a Riyadh-headquartered investment firm, estimated that more than 10,000 international delegates are due to visit Riyadh for the event. Adding the non-delegates that are expected to fly into the city in the run-up to the summit, the Kingdom is expected to host 22,000-25,000 visitors in 2020, with the bulk of them arriving in the seven days prior to the summit’s opening on November 21.
This is good news for the capital’s hotels, restaurants and shops. Riyadh is also expected to benefit from new, permanent infrastructure built especially for the event, including new office space, landscaping and road upgrades. The scale of increased consumer spending, temporary jobs and government investment is sufficient enough to influence the Kingdom’s annual GDP – although to what extent remains uncertain. Jadwa Investment foresees an additional 0.2% being added to non-oil private sector GDP as a result of hosting the G20 summit. Multinational banking firm Samba Financial Group sees similar potential, but pointed out that if the government follows through on the public sector salary freeze revealed in its 2020 budget plans, reduced household spending could undermine the gains resulting from the G20 events.
The government’ responses to the Covid-19 pandemic, including the duration of travel restrictions and its approach to public gatherings in 2020, add further uncertainty to the picture. By staging an event of such scale, attended by the global political and business community, and widely covered by world’s press, Saudi Arabia has a valuable opportunity to reaffirm its position within the international community, as well as showcase its potential as a destination for large-scale events and tourism.
Read More from OBG
