The big moneymakers of the G20 attack taxation and the banks

The big moneymakers of the G20 attacked tax reform and multilateral donors on Tuesday, without much progress on debt restructuring, while the World Bank was alarmed by the growing divisions between rich and poor countries.

Several economies remain in trouble after the double shock of the coronavirus pandemic and the consequences of Russia’s war in Ukraine which affects world prices of fuels and raw materials.

Climate change also worsens the situation of the poorest countries and those least able to overcome the situation.

Indian Finance Minister Nirmala Sitharaman, who chairs and hosts the meeting in Gandhinagar, in the western Indian state of Gujarat, opened the proceedings on Monday by reminding financial leaders that they have “the responsibility to guide the world economy towards strong, sustainable, balanced and inclusive growth”.

The President of the World Bank, Ajay Banga, expressed alarm on Tuesday at the danger of a fracture in the world economy, in the absence of progress in the fight against poverty.

“What keeps me awake at night is the mistrust that silently divides the North and the South of the planet at a time when we need to unite,” Banga told ministers during their discussions on international financial structures.

The World Bank is working to increase its lending capacity, including by raising hybrid capital from shareholders, but it said the future economy cannot be built on expansion at the expense of the environment.

“The truth is simple: we cannot endure another period of CO2-intensive emissions growth,” insisted Mr. Banga, an Indian-American who took up his post at the Bank last month, appointed by US President Joe Biden.

According to the United States, efforts to reform multilateral donors, such as the World Bank and regional institutions, could unlock $200 billion over the next decade.

– “The reign of poverty” –

“The frustration of the countries of the South is understandable. In many ways, they are paying the price for our prosperity,” he added.

“While they should be on the rise, they fear that the promised resources will be diverted to the benefit of the reconstruction of Ukraine,” he continued.

According to Mr Banga, “they feel that energy rules are not applied in a uniform way, which limits ambitions, and they fear that the reign of poverty will break a new generation”.

Debt restructuring deals for low-income countries have been high on the agenda of the group of twenty major economies, but talks have made little progress, officials say.

China, the world’s second-largest economy and the biggest financial backer to several struggling, low-income countries in Asia and Africa, has so far opposed a common multilateral agreement on the issue.

More than half of low-income countries are near or in debt distress, twice as many as in 2015, US Treasury Secretary Janet Yellen said.

Ms Yellen said on the sidelines of the G20 on Sunday that Zambia’s debt deal had taken “too long to negotiate” and added that she hoped Ghana and Sri Lanka’s deal could be “finalized quickly”.

The finance ministers of India and China, neighbors and rivals, met early Tuesday, without commenting to reporters.

G20 discussions also focused on reforming multilateral development banks, regulating cryptocurrencies and facilitating access to finance to mitigate and adapt to the impact of climate change.

Last week, 138 countries agreed on a first step to distribute tax revenues from multinationals more fairly.