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The G20 debates economic reactivation and aid for poor countries

The finance ministers of the G20 and the leaders of the central banks of the 20 richest countries in the world are meeting this Wednesday virtually to coordinate the economic reactivation and increase aid to the poor countries worst hit by the coronavirus pandemic.

The meeting, under the Italian presidency, began shortly after 12:00 local time (10:00 GMT) and will also address the proposal of the United States Secretary of the Treasury, Janet Yellen, to introduce a global minimum tax on corporate income.

This initiative, which seeks to end competition for low taxes between countries and the use of tax havens by companies, is among the most important topics on the agenda.

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 will probably decide on a moratorium on debt payments for the poorest nations 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.

– IMF and US proposals –

The G20 should also support the use of a new issuance of special drawing rights (SDR), a proposal presented at the end of March by the IMF’s director general, 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,” according to the IMF leader.

The G20 finance ministers will also pronounce on the United States’ proposal for a global minimum tax on companies. The group could unveil a proposal in July.

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%.

The international reform would have two components: the minimum tax rate and the establishment of a system to modulate corporate taxes based on profits in each country, regardless of where companies are based, which would probably affect the tech giants the most.

At the last G20 meeting, held in February, the big moneymakers set the goal of reaching consensus on a digital tax by mid-2021.

bur-kv / mis

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