African Reserves

Virus variants threaten global recovery, G20 warns


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  • Variants, vaccine shortages increase risks-G20
  • Global tax deal on track for October signing
  • But obstacles from the US and EU could complicate matters
  • Call for financial stability

VENICE, Italy, July 10 (Reuters) – An upsurge in new coronavirus variants and limited access to vaccines in developing countries threaten the global economic recovery, finance ministers from the world’s 20 largest economies warned on Saturday.

The G20 rally in the Italian city of Venice was the first face-to-face meeting of ministers since the start of the pandemic. The decisions include the approval of new rules aimed at preventing multinationals from shifting their profits to tax havens with low tax rates.

This paves the way for G20 leaders to finalize a new global minimum corporate tax rate of 15% at a summit in Rome in October, a move that could recoup hundreds of billions of dollars for the public treasuries put in. severe test by the COVID-19 crisis.

A final statement said the global economic outlook had improved since the G20 talks in April thanks to the rollout of vaccines and economic support programs, but acknowledged its fragility in the face of variants like the rapidly spreading Delta.

“The recovery is characterized by large divergences between and within countries and remains exposed to downside risks, in particular the spread of new variants of the COVID-19 virus and different vaccination rhythms,” we read.

While the G20 countries have pledged to use all political tools to fight COVID-19, the Italian hosts of the meeting said there was also an agreement to avoid imposing further restrictions on people.

“We all agree that we must avoid re-introducing any restrictions on the movement of citizens and the way of life of people,” said Italian Economy Minister Daniele Franco, whose country holds the rotating presidency of the G20 until December.

The statement, while highlighting support for “equitable global sharing” of vaccines, did not propose concrete measures, simply acknowledging a recommendation of $ 50 billion in funding for new vaccines by the International Monetary Fund, the World Bank, the World Health Organization and the World Trade Organization.

The differences in immunization levels between the rich and the poor around the world remain huge. WHO director-general Tedros Adhanom Ghebreyesus called the divergence a “moral outrage” that also undermines broader efforts to contain the spread of the virus.

While some of the wealthiest countries have now given more than two-thirds of their citizens at least one shot of the vaccine, that figure falls well below 5% for many African countries.

Brandon Locke, of the nonprofit public health group ONE Campaign, denounced what he described as the inaction of the G20, calling it a “lose-lose situation for everyone.”

“Not only will this cost lives in the poorest countries, but it will increase the risk of new variants that will wreak havoc in the richest,” he said.

Italy said the G20 would revisit the issue of financing vaccines for poor countries ahead of the Rome summit in October and that new variants was an area that needed to be considered. He did not give more details.

“We need to agree on a process for everyone on the planet to have access to vaccines. Otherwise, the IMF predicts the global economy will lose $ 9 trillion,” the organization said. Religious Development Jubilee USA Network.

FILE PHOTO: Participants attend the G20 High Level Tax Symposium at the G20 Finance Ministers and Central Bank Governors Meeting in Venice, Italy, July 9, 2021. G20 Italy / Document via REUTERS

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He was referring to an IMF forecast that international cooperation on COVID-19 vaccines could accelerate the global economic recovery and add $ 9 trillion to global income by 2025.

TAX DEDUCTIONS

A Reuters tally of new COVID-19 infections shows they are increasing in 69 countries, with the daily rate pointing upwards since late June and now reaching 478,000. Https://graphics.reuters.com/world-coronavirus-tracker -and-maps /

IMF Managing Director Kristalina Georgieva said the world was facing “a worsening two-way recovery” in part due to differences in vaccine availability.

The biggest political move during the talks was a well-signaled deal on the global corporate tax rate, capping eight years of wrangling over the issue.

Setting a floor of 15% aims to prevent multinationals from seeking the lowest tax rate. It would also change the way companies like Amazon (AMZN.O) and Google (GOOGL.O) are taxed, basing it in part on where they sell products and services, rather than the location of their business. the head office.

US Treasury Secretary Janet Yellen said any countries opposing it would be encouraged to sign by October.

“We will try to do this, but I must stress that it is not essential that all countries participate,” she said, adding that the agreement provided for mechanisms against the use of tax havens everywhere.

G20 members represent over 80% of the world’s gross domestic product, 75% of world trade and 60% of the planet’s population, including the United States, Japan, Britain, France, Germany and India.

In addition to Ireland, Estonia and Hungary, recalcitrant countries of the European Union, the other countries which have not signed are Kenya, Nigeria, Sri Lanka, Barbados and Saint Vincent -and the Grenadines.

EU Economy Commissioner Paolo Gentiloni told reporters that there were still discussions about the level of a company’s profits that should be taxed nationally, and whether other sectors beyond financial and mining services should be exempt.

Among other sticking points, a fight in the US Congress over President Joe Biden’s planned tax increases on corporations and wealthy Americans could cause problems, as could a separate European plan for a digital tax on businesses. technological.

G20 officials called on the International Monetary Fund “to quickly come up with workable options” for rich countries to funnel part of a $ 650 billion IMF foreign exchange reserve issue to the poorest countries.

They did not endorse the IMF’s $ 100 billion target for the transfer of special drawing rights to countries in need, but called for contributions from all countries capable of reaching “an ambitious target.”

Additional reporting by Christian Kraemer, Francesco Guarascio, David Lawder and Angelo Amante Writing by Mark John Editing by Gareth Jones, Pravin Char and Christina Fincher

Our Standards: The Thomson Reuters Trust Principles.

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