The story appears on

Page A10

April 9, 2021

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business » Finance

US$650b resource boost for IMF

Finance officials of the world’s major economies on Wednesday agreed on a proposal to boost the resources of the International Monetary Fund by US$650 billion as a way to provide more support to vulnerable countries struggling to deal with a global pandemic.

The Group of 20 major industrial countries issued a joint statement that also announced the approval of a final six-month moratorium on debt payments by 73 of the world’s poorest countries.

The proposal to increase the IMF’s resources received a boost earlier this year when it got the backing of the Biden administration. The resources are known as IMF Special Drawing Rights and create an asset that countries can use to bolster their own reserves.

The proposal still needs approval from the IMF’s board and then contributions from member countries.

The debt-payment deal extends the moratorium begun last year until the end of this year. But aid groups expressed unhappiness that the G-20 is saying the extension will be the final one to be offered.

“We’ve seen progress on debt relief and aid, but we still need to solve multiple challenges so countries can get through this crisis,” said Eric LeCompte, executive director of Jubilee USA Network. “It is unlikely that the breathing space indebted countries get with this extension will be enough.”

The G-20 group also lent support to a Biden administration drive to establish a global minimum tax rate for corporations, saying it hoped to achieve a consensus in the group by the middle of this year.

US Treasury Secretary Janet Yellen had urged countries to adopt a minimum corporate tax in a speech on Monday, saying it was needed to stop a “30-year race to the bottom” in which countries had cut corporate tax rates to lure multinationals.

The Biden administration is proposing to boost the US corporate tax rate to 28 percent, up from the current 21 percent where it had been reduced by a Trump administration tax cut bill approved in 2017. Before it was reduced, the US corporate tax rate stood at 35 percent. The administration hopes to use the extra corporate tax revenue to help fund increased spending on infrastructure.

Italian Finance Minister Daniele Franco, the chair of the G-20 finance group, said that Yellen had told the group that the Biden administration proposal is consistent with the multinational effort to agree on a minimum tax rate.

Yellen and Federal Reserve Chairman Jerome Powell represented the US at the virtual meeting, which was being held in advance of virtual meetings this week of the 190-nation IMF and its sister lending organization, the World Bank.

On Tuesday, the IMF released an updated economic forecast which boosted global growth for this year to 6 percent, up from a projection of 5.5 percent in January, with the boost coming due to accelerated vaccine rollouts and the US$1.9-trillion rescue package the Biden administration pushed through Congress last month.

IMF Managing Director Kristalina Georgieva said on Wednesday that without the massive amounts of support provided by governments, last year’s recession, the worst since World War II, would have been three times more severe.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend