G20 committed to helping poor countries hit by the pandemic

The group of the 20 richest countries in the world decided to moratorium on debt payments until the end of the year.

The G20 finance ministers and the leaders of the central banks of the 20 richest countries pledged on Wednesday to help poor nations hit by the coronavirus pandemic.

The leaders asked the International Monetary Fund (IMF) to increase aid for the nations hardest hit by the virus and decided to extend the debt moratorium for those countries.

Gathered telematically under the coordination of Italy, the G20 of Finance decided to "extend the suspension of the payment of the debt of the poorest countries until the end of 2021", as announced by the Italian Minister of Economy, Daniele Franco, after specifying that it is about of the "last" extension.

The world economy is expected to recover from the pandemic faster than expected, with growth of 6% this year, the International Monetary Fund (IMF) said on Tuesday.

However, emerging countries are lagging behind, due to limited budgetary resources and slow vaccination campaigns.

The group of the 20 richest countries in the world therefore decided to moratorium on debt payments until the end of the year.

The moratorium, which in October was extended to June 30, 2021, had a fairly limited impact.

Only 46 countries, of the 73 indicated, requested and obtained the deferral of interest payments, for an amount of 5.700 million dollars.

The G20 also supported the use of a new issuance of special drawing rights (SDRs), a proposal presented at the end of March by IMF CEO Kristalina Georgieva.

The proposal consists of an allocation of SDR for an amount equivalent to 650.000 million dollars that would provide supplementary ammunition to the institution to help countries recover from the crisis caused by the pandemic, "providing additional liquidity to the economic system," as explained the head of the IMF.

"We ask the IMF to present a concrete proposal," declared the ministers in the statement released at the end of the meeting.

World Bank President David Malpass welcomed the proposal and called for "greater transparency."

"I invite all G20 countries to publish the terms of their financing contracts and I urge them to support our efforts as the World Bank so that the data of the creditors and debtors corresponds," he said.

The day before Malpass acknowledged that poor countries will need real debt relief in the long term, since, even with the temporary moratorium, the burden of debt in many cases is unsustainable.

The IMF and US proposals

The IMF announced on Monday a third round of debt service relief for 28 of the world's poorest countries worth $ 238 million.

The vast majority of beneficiary countries are from Africa, although Haiti, Afghanistan, Solomon Islands, Nepal, Tajikistan and Yemen are also included.

On the proposal of the Secretary of the Treasury of the United States, Janet Yellen, to introduce a global minimum tax on corporate income, the G20 limited itself to declaring that they are committed to finding "a global and consensus solution" before mid-2021 .

This initiative seeks to end the competition for low taxes between countries and the use of tax havens by companies, especially those of technology.

"It is urgent to reach an agreement" on this issue, acknowledged the German Finance Minister, Olaf Scholz.

The idea has been promoted by the Organization for Economic Cooperation and Development (OECD) and received new impetus this week when the US Treasury secretary announced that she would seek a deal at the G20.

No rate has been decided, but estimates range from 12,5% ​​to 21%. / AFP

 

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