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G-20 to agree to extend debt relief for poor nations amid pandemic

by October 14, 2020 Market

Finance chiefs from the Group of 20 major economies are expected to agree Wednesday to extend their debt relief for developing countries hobbled by the coronavirus pandemic, conference sources said.

The G-20 finance ministers and central bank governors are holding a virtual meeting and will also likely endorse delaying a deal on new taxation rules for globally operating technology companies to mid-2021. They will also discuss coordination in responding to economic impact from the pandemic, the sources said, Kyodo reports.


They will release a joint statement after the meeting, in which Finance Minister Taro Aso and Bank of Japan Governor Haruhiko Kuroda are representing Japan.

The G-20 is seeking to extend the public debt service freeze for poor nations beyond the end of the year. The initiative was launched in May by the G-20 and Paris Club traditional creditor nations to help developing countries to take effective measures against the health crisis.

The focus is on whether China, a major creditor to the developing world, will support the extension of the program.

Last month, finance ministers from the Group of Seven industrialized nations, which make up part of the G-20, said in a statement that some countries are mitigating the effectiveness of the initiative by classifying state-owned financial institutions as private lenders to avoid being covered by the program.

Aso then named China, telling reporters that it is necessary to raise pressure on the country to abide by the initiative.

On the proposed digital tax, the G-20 is expected to back the announcement on Monday by the Organization for Economic Cooperation and Development that it will delay a deal to mid-2021.

Over 130 countries, including OECD members, originally aimed to wrap up talks this year on a new taxation framework for global digital giants like Google LLC and Apple Inc. that are seen as not paying their fair share of taxes by taking advantage of low-tax jurisdictions.

But the pandemic as well as disagreements over U.S. proposals have stalled the negotiations.

Washington has opposed targeting American tech firms, also including Facebook Inc. and Inc., and sought to set a «safe-harbor» condition, which would allow companies to choose to operate under the current taxation rules.

European nations have pressed for taxing them appropriately where they make huge profits. The existing taxation rules are based more on where companies’ permanent offices and plants are located rather than where they make their sales.

The G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.



Source: Kazakhstan 2050