G20 to boost IMF war chest, extend debt-servicing freeze -draft
Send a link to a friend
[April 07, 2021] By
Andrea Shalal
WASHINGTON (Reuters) - Finance officials
from the Group of 20 major economies are poised to back a $650 billion
boost in the IMF's emergency reserves on Wednesday and extend a freeze
on debt payments as part of an effort to help developing countries still
struggling to combat the COVID-19 pandemic.
The G20 gathering, taking place virtually on the sidelines of the spring
meetings of the International Monetary Fund and World Bank, will also
give U.S. Treasury Secretary Janet Yellen a chance to press for a global
minimum tax on corporate profits.
The IMF on Tuesday raised its 2021 global growth forecast to 6%,
reflecting a rapidly brightening outlook for the U.S., but it warned
that emerging market economies were lagging advanced economies. Pointing
to a dramatic divergence between the outlook for the United States and
much of the rest of the world, it said the pandemic threatened to
reverse years of progress in reducing poverty.
IMF Managing Director Kristalina Georgieva told an event with Yellen and
World Bank President David Malpass that richer countries should ensure
low-income countries received coronavirus vaccinations for the sake of
everyone. "We have no way to get through (this) without pulling
together," she said.
Expanding the IMF's reserves, or Special Drawing Rights, would boost
liquidity for all members, without adding to the debt burden of the
30-some countries already in or facing debt distress, finance officials
and economists said.
Extending the current freeze on debt service payments by the poorest
countries could provide billions of dollars for them to spend on
vaccines and stimulus, Malpass told reporters on Monday.
More than 250 faith groups and non-profit organizations urged G20
leaders, the White House and the IMF to go beyond the moratorium on debt
payments and expected SDR allocation to actually cancel debt and expand
debt relief for developing countries, in a letter to be delivered on
Wednesday.
[to top of second column] |
U.S. Treasury Secretary-designate Janet Yellen in Wilmington,
Delaware, U.S., December 1, 2020. REUTERS/Leah Millis/File Photo
G20 officials are also expected, at Yellen's wish, to remove a reference in the
communique to stable exchange rates first inserted by the former Trump
administration, reverting to phrasing that emphasizes the importance of
underlying fundamentals, said one source familiar with the discussions.
Yellen had told U.S. senators during her confirmation hearing that the value of
the dollar should be determined by markets, a break from former President Donald
Trump's desire for a weaker currency.
Taxes will also be a key item on the G20 agenda after Yellen this week pledged
to work on a global corporate minimum tax rate, which Germany and France said
could ease the way to reaching a landmark deal by mid-year.
Negotiators are racing to reach agreement among more than 140 countries for
updating the rules for taxation of cross-border commerce for the first time in a
generation.
It was unclear what progress G20 finance leaders may be able to make in tax
discussions on Wednesday.
Communique language drafted earlier this week and seen by Reuters was
inconclusive: "We will continue our cooperation for a globally fair, sustainable
and modern international tax system," G20 officials wrote, adding they remain
committed to reaching consensus by mid-2021.
Irish Finance Minister Paschal Donohoe on Tuesday voiced concerns about how a
global minimum rate would affect a smaller economy such as Ireland's, which
chose a low-tax model to attract international investment.
(Reporting by Andrea Shalal; Editing by Leslie Adler)
[© 2021 Thomson Reuters. All rights
reserved.] Copyright 2021 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |