G20 extends debt moratorium till end-2021

ROME: G20 finance ministers said on Wednesday they would extend the moratorium on debt interest payments for the world’s poorest countries until the end of 2021.

“In light of the persistence of significant liquidity needs related to Covid-19, we agreed to its final extension by 6 months through end December 2021, which is also agreed by the Paris Club,” said the group, referring to the Debt Service Suspension Initiative.

They also backed the International Monetary Fund’s proposals to boost its reserve offerings by $650 billion to help poor nations hit by coronavirus.

In a statement, they called on the IMF “to make a comprehensive proposal for a new Special Drawing Rights (SDR) general allocation of $650 billion to meet the longterm global need to supplement reserve assets”, adding that such an allocation “would enhance global liquidity and will help the global recovery”.

Meanwhile, the IMF said wealthy firms that have done well during the pandemic could pay more in taxes to finance recovery efforts, as it backs a push for governments to unify their corporate tax rates.

The renewed support for the tax reforms comes as G20 finance ministers are meeting to discuss a minimum corporate tax that would undermine the use of tax havens that drain government coffers.

“The IMF has been calling for a minimum, global corporate income tax rate as a way to interrupt the race to the bottom in corporate income taxation,” said Vitor Gaspar, head of the IMF’s Fiscal Affairs Department.

Gaspar spoke to reporters as he unveiled the IMF’s Fiscal Monitor report which argues that higher taxes on wealthy firms and individuals, even if temporary, could finance policies needed to ensure recovery from the pandemic.

Paolo Mauro, deputy director of Fiscal Affairs Department, highlighted the option of using a “recovery contribution” or surcharge on personal or corporate incomes “given that some corporates have done very well,” during the pandemic.