G20 agrees more help for poorest virus-hit nations

G20 agrees more help for poorest virus-hit nations
Italy’s Economy Minister Daniele Franco, left, speaks during the 2nd G20 Finance Ministers and Central Bank Governors meeting via videoconferencing in Rome. (AFP)
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Updated 08 April 2021

G20 agrees more help for poorest virus-hit nations

G20 agrees more help for poorest virus-hit nations
  • Debt-service pause for poor nations extended to end of 2021

ROME: World finance chiefs agreed on Wednesday to boost reserves at the International Monetary Fund (IMF) by $650 billion and extend a debt-servicing freeze to help developing countries deal with the coronavirus disease (COVID-19) pandemic, according to a Group of 20 communique.

Finance ministers and central bank governors from the world’s 20 biggest economies also revived a pledge to fight trade protectionism — a reference that had been dropped since 2017 at the insistence of former US President Donald Trump’s administration.

The communique also sharpened language on tackling climate change, a topic watered down in G20 statements during the Trump era, and showed progress in moving toward adoption of a global minimum corporate income tax by July following work in the Organization for Economic Co-operation and Development (OECD).

“We will further step up our support to vulnerable countries as they address the challenges associated with the COVID-19 pandemic,” the G20 said, reiterating they would keep fiscal and other economic support in place for as long as necessary.

“We call on the IMF to make a comprehensive proposal for a new Special Drawing Rights (SDR) general allocation of $650 billion to meet the long-term global need to supplement reserve assets.”

Expanding the IMF’s reserves, or SDRs, would boost liquidity for all members, without adding to the debt burden of the roughly 30 countries already in or facing debt distress, finance officials and economists said.

The G20 also agreed to a final extension to the end of 2021 of the Debt Service Suspension Initiative, meant to free cash in developing countries to fight COVID-19.

In a joint statement on Wednesday, Mexico and Argentina urged greater debt relief for middle-income countries, saying it could prevent a debt crisis emerging on the back of the pandemic.

But Italy, which holds the G20 presidency, said there was no discussion of extending the common debt framework to those countries.

The G20 also backed equitable access to COVID-19 vaccines and encouraged efforts to rapidly step up the production and distribution of shots, without which there would be no stable and lasting recovery.

IMF officials on Wednesday endorsed US President Joe Biden’s plan to raise corporate income taxes and negotiate a global minimum tax, adding that companies and rich individuals who have prospered during the pandemic could afford to pay more.

The G20 expects a deal by July on where large multinational companies, including digital giants like Google, Amazon or Facebook, should be taxed and at what minimum rate.