Key points agreed at G-20 in Venice

VENICE – Worries over the risk of coronavirus variants, discussion of the price of carbon, the tax on multinationals – here are the key points agreed by Group of 20 (G-20) finance ministers in Venice on Saturday (July 10).

Global tax reform

In their final statement, the G-20 ministers “endorse” a framework for global tax reform agreed on July 1 and since backed by 132 countries, describing it as a “historic agreement on a more stable and fairer international tax architecture”.

Negotiated under the auspices of the Organisation for Economic Cooperation and Development (OECD), it envisages a global minimum tax of at least 15 per cent on the world’s companies, and proposes to give countries a share of tax levied on profits that multinationals earn from their territories.

The G-20 members urge those “that have not yet joined the international agreement to do so”.

Final agreement is expected later this year, although reforms must be implemented by national parliaments – and Republicans in the US Congress, for one, are strongly opposed.

Risks to recovery

The G-20 says the global economic outlook has improved in recent months, thanks in large part to the roll-out of vaccinations, but warns the crisis caused by the coronavirus pandemic is not over.

“The recovery is characterised by great divergences across and within countries and remains exposed to downside risks, in particular the of new variants of the Covid-19 virus and different paces of vaccination,” the final statement says.

The finance ministers also repeated their intention to “continue to sustain the recovery, avoiding any premature withdrawal of support measures” to the economy.

But amid warnings about the risks of inflation, they said they would act “while remaining consistent with central bank mandates – including on price stability”.

Vaccine access

The G-20 ministers call for the “equitable global sharing” of vaccines, saying immunisation against coronavirus is a “global public good”.

Many developed countries have vaccinated large swathes of their populations, but campaigns elsewhere have barely begun, often due to a shortage of jabs.

“While 70 per cent of people in some developed countries are vaccinated, that figure stands at less than one per cent for low-income countries,” UN Secretary-General Antonio Guterres warned the G-20 on Friday.

The ministers said they support efforts to diversify vaccine manufacturing capacity and strengthen health systems, as well as the delivery of vaccines to developing countries.

The final statement also “takes note” of recommendations by a specially convened panel of experts who said at least US$75 billion (S$100 billion) was needed over the next five years to prevent and prepare for the next potential pandemic.

It tasked experts to come up with “concrete proposals” by a G-20 meeting in October.

Help for developing countries

The G-20 ministers support an initiative by the International Monetary Fund (IMF) to increase aid to countries struggling to cope with coronavirus, urging its “swift implementation” by the end of August.

The IMF is increasing its special drawing rights (SDRs) – international reserve assets that provide countries with extra liquidity – by US$650 billion.

Last month, G-7 leaders announced a goal to provide IMF support worth US$100 billion for African countries most in need.

Without mentioning this figure, the G-20 on Saturday called for “contributions from all countries able to do so to reach an ambitious target in support of vulnerable countries”.

Climate change

The final statement makes mention of carbon pricing as a possible tool against global warming – a first in a communique from G-20 finance ministers, noted France’s Bruno Le Maire.

He put forward the idea of a floor price for carbon, to get around the politically difficult task of setting a single, global price.

At the start of the G-20 gathering on Friday, US Treasury Secretary Janet Yellen called on her counterparts who she said represented 80 per cent of carbon emissions to take urgent action to decarbonise the economy.

Comments are closed.