Wednesday , August 5 2020
Home / World News / G20 delays debt freeze decision amid pandemic pain

G20 delays debt freeze decision amid pandemic pain

World Bank officials have singled out China, a G20 member and the largest creditor for developing nations, for holding back debts owed to its state-owned development and state-owned companies.

World Bank President David Malpass also told G20 officials on Saturday, local time, that they needed to “open the door” to talks on reducing the overall debt overhang for the poorest countries.

Failure of the private sector to participate has also been a growing concern. The Institute for International Finance last week said its members had not received any formal requests for debt relief from countries eligible for the DSSI.

The communique did not mention China, but G20 officials said they would closely monitor implementation of the debt freeze and noted efforts to set up a fiscal monitoring framework to strengthen the quality of debt data and improve debt disclosure.

“All official bilateral creditors should implement this initiative fully and in a transparent manner,” they said.

They also said they “strongly encourage” commercial lenders to provide relief when requested.

Decisions on extending the freeze would come after the International Monetary Fund and World Bank complete a report on the liquidity needs of countries before the next G20 finance officials’ meeting in October, the communique said.

The UK-based Jubilee Debt Campaign said the G20’s failure to take swifter and more decisive action would cost poor countries billions of dollars each month.

“We needed rapid and concerted action, but instead the G20 have backtracked,” said Sarah-Jayne Clifton, director of Jubilee Debt Campaign, one of many groups that have called for extending the debt freeze and expanding it.

More than 200 religious, labor, human rights, environmental and development groups signed a separate letter spearheaded by Jubilee USA Network that was sent this week to G20 leaders, the White House and the IMF.

Finance officials from the G20 economies also on Saturday vowed to resolve major differences over taxing big tech companies and reach a broad, consensus-based solution on international taxation this year.

The United States has been at loggerheads over the issue with Britain, France and other key allies, who have adopted or are considering digital service taxes as a way to raise revenue from the local operations of big tech companies.

Critics say those firms profit enormously from local markets while making only limited contributions to public coffers, but Washington contends the taxes discriminate against US tech firms such as Google, Facebook and Apple Inc.

The Trump administration this month ratcheted up pressure on France over its 3 per cent digital services tax, saying it would impose additional duties of 25 per cent on French imports valued $US1.3 billion but would hold off on implementing the move while talks continued in the Organisation for Economic Co-operation and Development.

G20 finance ministers and central bankers on Saturday acknowledged that the coronavirus pandemic had slowed work toward an international plan, but said they expected concrete proposals to emerge before their next meeting in October.

“We remain committed to … overcome remaining differences and reaffirm our commitment to reach a global and consensus-based solution this year,” they said after a virtual meeting.

After the meeting, German Finance Minister Olaf Scholz said, “Fair taxation of international companies and large digital groups is more urgent than ever.”

French Finance Minister Bruno Le Maire said reaching an agreement by year end was “indispensible”.

“The [pandemic] crisis proved that these digital giants were the big beneficiaries of the crisis. They must pay their fair portion of tax,” he said.

Reuters

Most Viewed in World

Loading

About admin

Check Also

It’s in our interests to step up support for our region

While attention has been focused on the challenges of managing the rise of China, a …