Daily Times

International Monetary Fund (IMF) Managing Director Kristalina Georgieva has appreciated the G20’s support for the historic agreement on a minimum corporate tax rate.

In a statement issued on Sunday after the conclusion of the meeting of the G20 finance ministers and central bank governors, she added, “This will help countries preserve their corporate tax base and mobilise revenue by ensuring that highly profitable companies pay their fair share everywhere.”

She commended the G20 for the focus on climate risks and role of carbon pricing mechanisms. She intended to follow up on a proposed international carbon price floor which could significantly accelerate the global economy’s transition to low-carbon growth.

The G20 recognised the urgent need to be better prepared for future health threats and welcomed the report of the High Level Independent Panel on Financing Global Commons for Pandemic Preparedness and Response, committing to work with international financial institutions and relevant partners to develop proposals for sustainable financing to strengthen future pandemic preparedness and response.

“I also wish to express my profound appreciation for the G20’s and our membership’s support for a new SDR (Special Drawing Right) allocation of $650 billion—the largest in IMF history and a shot in the arm for the world,” she said.

Turning to the global economy, she said the recovery continues, broadly in line with IMF’s April projection of 6 percent global growth this year. Yet the divergence across economies is intensifying. Essentially, the world is facing a two-track recovery, she further said.

She said that with a dangerous wave of a highly transmissible variant now making its way across the globe, the pandemic remains the fundamental risk facing the world, adding urgent action is needed in three key areas.

“First, accelerate vaccinations: to cover at least 40 percent of the population in every country by the end of 2021, and 60 percent by the middle of 2022. Second, implement sound macroeconomic policies: they continue to play a pivotal role in securing the recovery,” she maintained.

She suggested that fiscal policy should provide well-designed support, tailored to country circumstances, to protect the most vulnerable and minimise scarring. She said that monetary policy should remain accommodative, as inflationary pressures are likely to be temporary.

“Third, step up support to vulnerable countries,” she said. The IMF’s new SDR allocation of US$650 billion will increase countries’ reserves, create additional space for vaccine financing, and boost confidence in the recovery. “To magnify the impact of the allocation, we will move quickly to explore options for economically stronger members to voluntarily use their SDRs to help poor and vulnerable countries,” she added.

“Scaling up the IMF’s Poverty Reduction and Growth Trust (PRGT) is a tried-and-tested option that will enable us to provide zero-interest financial support to low-income countries through the medium term. We are also exploring the possibility of creating a new Resilience and Sustainability Trust for vulnerable members to build forward better, including through financing for greener, more resilient and sustainable growth over the medium-term,” the IMF chief further said.