Kristalina Georgieva. Reuters
The executive board of the International Monetary Fund approved a $650 billion expansion in resources to support economically vulnerable nations as they battle the coronavirus pandemic.
IMF Managing Director Kristalina Georgieva said on Friday that the new support, the largest such expansion in the history of the 190-nation lending institution, would be a “shot in the arm for the world.”
To put the size of the funding expansion in context, the IMF approved a $250 billion boost in SDR reserves following the 2008 financial crisis.
It is a reversal of the stance taken by the Trump administration and it began in February when the Biden administration got behind the effort.
Republican members of Congress have objected to the funding, saying that the expanded IMF resources would benefit U.S. adversaries such as China, Russia and Iran. However, the assistance has been strongly supported by international relief agencies.
Eric LeCompte, executive director of the religious-affiliated development group Jubilee USA Network, said that the IMF action would allow developing countries to immediately receive more than $200 billion in support.
“Wealthy countries who receive emergency reserves they don’t need should transfer those resources to developing countries struggling through the pandemic,” LeCompte said.
More than six months after vaccines became available, reported COVID-19 deaths worldwide have fallen to about 7,800 each day, after topping out at over 18,000 a day in January. The World Health Organization recorded just under 54,000 deaths last week, the lowest weekly total since last October.
However, COVID-19 has illuminated global inequities as deaths worldwide climbed to 4 million, a milestone recorded Wednesday by Johns Hopkins University.
Vaccination drives are barely getting started in Africa and other desperately poor corners of the world because of extreme shortages of shots.
To fund the spending, the IMF will expand its Special Drawing Rights, a currency reserve that can be tapped by IMF member countries.
Canada’s Finance Minister Chrystia Freeland arrives to attend the G20 finance ministers and central bank governors’ meeting in Venice, Italy, on Friday. Reuters
Finance chiefs of the G20 club of large economies have backed a landmark move to stop multinationals shifting profits into low-tax havens and win back hundreds of billions of dollars in lost revenues, a draft communique showed.
The agreement at talks in the Italian city of Venice is set to be finalised on Saturday and caps eight years of wrangling over the issue. The aim is for country leaders to give it a final blessing at an October summit in Rome.
The pact to establish a minimum global corporate tax rate of at least 15% is an attempt to squeeze more money out of tech giants like Amazon and Google as well as other multinationals able to shop around for the most attractive tax base.
While tax campaigners point to loopholes in the proposals and wanted a more ambitious crackdown, the move is a rare case of cross-border coordination in tax matters and could strip many tax havens of their appeal.
“We invite all members that have not yet joined the international agreement to do so,” the communique seen by Reuters said of a number of countries still resisting the move.
Two sources said the statement was expected to be released at the end of talks on Saturday without changes.
That would represent political endorsement of an agreement this month among 131 countries at talks hosted by the Paris-based Organisation for Economic Cooperation and Development.
Momentum for a deal accelerated this year with the strong backing of the Biden administration in the United States and many public treasuries around the world stretched by the massive fiscal support needed to shield pandemic-ravaged economies.
Geoffrey Okamoto, First Deputy Managing Director of the International Monetary Fund, called it a “net win for the world” but said work was still needed to simplify the agreement for countries, especially poorer ones, to take it on board.
“It has to be simple enough for the vast majority of the world to actually implement and administer it,” he told Reuters.
If all goes to plan, the new tax rules should be translated into binding legislation worldwide before the end of 2023. However, a fight in the U.S. Congress over President Joe Biden’s proposed tax increases on corporations and wealthy Americans could yet create hurdles.
Equally, there could be difficulties because European Union member states Ireland, Estonia and Hungary are among the countries that have not yet signed up.
“I am convinced that in the end we will come to a joint decision in the EU,” German Finance Minister Olaf Scholz told radio station DLF before heading to the talks.
The meeting of G20 finance ministers and central bankers in Venice is their first face-to-face encounter since the start of the COVID-19 pandemic.
The G20 members account for more than 80% of world gross domestic product, 75% of global trade and 60% of the population of the planet, including big-hitters the United States, Japan, Britain, France, Germany and India.
In an addition to earlier drafts, the communique said the support measures being put in place by wealthier countries to shield their economies from the ravages of the pandemic must be in line with central bank commitments to keep inflation stable.