ROME: G20 finance ministers and central bankers agreed on Wednesday April 7 to extend a moratorium on interest payments on the debt of the poorest countries, which could be lagging behind the global recovery after the coronavirus pandemic.

In an online meeting, the Group of 20 Most Powerful Nations also offered their support for the International Monetary Fund’s plan to increase its reserve offers of US $ 650 billion to help poor countries.

“We will further step up our support to vulnerable countries as they address the challenges associated with the COVID-19 pandemic,” said a joint statement issued by the G20.

The IMF forecast faster-than-expected global economic growth this year, at 6.0%, after the 2020 pandemic caused the worst peacetime slowdown since the Great Depression.

But U.S. Treasury Secretary Janet Yellen has warned of the risk the pandemic will reverse years of progress in tackling poverty and bridging the gap between poor and rich countries.

“We will further step up our support to vulnerable countries as they address the challenges associated with the COVID-19 pandemic,” said a joint statement issued by the G20.

The G20 said the debt moratorium, introduced in April last year and extended from October until June 30, would be extended once again until December.

“This final extension will allow recipient countries to mobilize more resources to face the challenges of the crisis and, where appropriate, to move to a more structural approach to address debt vulnerabilities,” said his statement.

The impact of the moratorium has been relatively limited so far, with just 46 out of 73 eligible countries requesting and being delayed on payments totaling US $ 5.7 billion, according to the latest official figures.

GLOBAL CORPORATE TAXATION

The G20 also supported the IMF’s plan to increase its allocation of Special Drawing Rights (SDRs) by US $ 650 billion to help poor countries.

“A new allocation would improve global liquidity and contribute to the global recovery, building on the latest assessment made by the IMF in 2016,” the statement said.

The SDRs, created by the IMF in 1969, play an influential role in global finance and help governments protect their financial reserves against global currency fluctuations.

They are also used as the basis for loans from the IMF’s critical lending facilities.

Although it is not a real currency per se – there are no coins or notes in SDRs – the IMF uses them to calculate its loans to countries in need and to set rates. interest on these loans.

A US proposal for an overall minimum corporate tax rate was also on the agenda, which is supported by the IMF and by major economies, including France and Germany.

Italian Finance Minister Daniele Franco said the reform – aimed at ending tax competition between countries and the use of tax havens by businesses – could be approved as part of a more tax package. large at the next G20 finance meeting.

“We hope that this agreement will take place in July,” he said at a press conference at the end of the meeting.

At their last meeting in February, G20 finance ministers made progress on another part of the tax package, a global digital tax targeting giants such as Amazon, Facebook and Google, after the United States abandoned a proposal considered a major obstacle.