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Help for low-income nations tops agenda at G20 meeting
AFP – G20 finance ministers and central bankers began a videoconference to coordinate post-pandemic recovery plans, increase help for the poorest COVID-hit countries and discuss a US-backed global minimum corporate tax.
The meeting hosted by current G20 chair Italy came a day after the International Monetary Fund (IMF) forecast faster-than-expected global economic growth this year of 6 percent, after the Coronavirus pandemic in 2020 caused the worst peacetime downturn since the Great Depression.
But developing countries, of which Cambodia is one, are lagging behind – and US Treasury Secretary Janet Yellen has warned of the risk that the pandemic reverses years of progress in fighting poverty and closing the gap between poor and rich nations.
Cambodia came 145th in a list of 191 countries compiled by the IMF World Economic Outlook October 2019, scoring gross domestic product (GDP) to purchasing power parity (PPP) of $4,664. GDP is the sum total of all goods and services produced by a country in one year. Purchasing power parity helps take into account inflation rates and the price of goods and services in each given place.
Of the other nine ASEAN members, Singapore came 4th ( with a PPP of $103,181), Brunei 6th ($80,384), Malaysia 49th ($33,333), Thailand 71st ($20,365), Indonesia 97th ($13,998), the Philippines 116th ($9,471), Laos 127th ($8,110), Vietnam 128th ($8,066) and Myanmar 134th ($6,707). Qatar topped the list at $132,886 and Burundi came last at $727.
Top of the agenda of this week’s meeting of the Group of 20 most powerful nations is whether to extend a moratorium on debt interest payments for the poorest countries, which is currently set to expire on June 30. A decision has yet to be resolved.
World Bank President David Malpass said this week he expects the G20 to prolong the moratorium, which was introduced in April last year and extended in October, one last time until the end of 2021.
Its impact has been relatively limited, however, with just 46 out of 73 eligible countries having asked for and obtained a delay on payments totalling $5.7 billion, according to the latest official figures.
The G20 is also expected to support the IMF’s plan to boost its reserve offerings, increasing its allocation of special drawing rights (SDR) by $650 billion, to help impoverished countries.
And the issue of a global minimum tax rate for corporations is also up for discussion after the new US administration under President Joe Biden threw its weight behind the idea.
The reform, supported by the IMF and by major economies including France and Germany, is aimed at ending tax competition between countries and the use of tax havens by companies.
Yellen said this week she would push for agreement among the G20.
The group could unveil a proposal by July, with estimates of the tax rate currently ranging between 12.5 percent and 21 percent.
The international reform would be comprised of 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 they are headquartered – which would probably affect tech giants the most.
At their last meeting in February, the G20 finance ministers moved closer towards an agreement on a global digital tax targeting giants such as Amazon, Facebook and Google, after the US dropped a proposal that was viewed as a key obstacle.