G20 finance chiefs back tax deal, pledge to sustain recovery, watch inflation By Reuters

G20 finance chiefs back tax deal, pledge to sustain recovery, watch inflation By Reuters

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© Reuters. Flags of G20 countries are seen outside the G20 venue before the start of the G20 Summit of major world economies in Cannes November 3, 2011. REUTERS/Dylan Martinez/Files

WASHINGTON (Reuters) – Finance leaders from the G20 major economies on Wednesday endorsed a global deal to revamp corporate taxation and pledged to avoid premature withdrawal of fiscal support while keeping a close eye on inflation, according to a final draft communique seen by Reuters.

The G20 finance ministers and central bank governors also called on the International Monetary Fund to establish a new trust fund to channel a $650 billion issuance of IMF monetary reserves to a broader range of vulnerable countries.

“We will continue to sustain the recovery, avoiding any premature withdrawal of support measures, while preserving financial stability and long-term fiscal sustainability, and safeguarding against downside risks and negative spillovers,” the G20 finance leaders said in the statement.

Given rising inflation pressures driven by supply chain bottlenecks and shortages as economies struggle to normalize, the leaders said that central banks are “monitoring current price dynamics closely.”

“They will act as needed to meet their mandates, including price stability, while looking through inflation pressures where they are transitory and remaining committed to clear communication of policy stances,” the G20 communique said.

They also pledged to work to address shortages of tools to fight the COVID-19 pandemic in low- and middle-income countries in coming months, including vaccines, therapeutics and diagnostics.

The G20 finance leaders are meeting in Washington on the sidelines of the IMF and World Bank annual meetings, which come just days after 136 countries agreed to adopt a 15% minimum corporate tax and partially reallocate taxing rights for large profitable multinational companies to countries where they sell products and services.

The G20 leaders endorsed the OECD tax agreement and called for swift development of so-called “model rules” to guide countries’ implementation of the deal and “ensure that the new rules will come into effect at a global level in 2023.”

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