Transcript of G-24 Press Conference

April 19, 2018

Eran Wickramaratne, Chair

Adrian Armas, First Vice-Chair

Kenneth Ofori-Atta, Second Vice-Chair

Indrajit Coomaraswamy, Central Bank Governor, Sri Lanka

Marilou Uy, Director, G-24 Secretariat

Randa Elnagar, Communications Officer, IMF

MS. ELNAGAR: Good afternoon, everyone, and welcome to the Spring Meetings. This is the press conference for the G-24. I am Randa Elnagar of the IMF’s Communications Department. We have with us here the Chair of the G-24, the Honorable Eran Wickramaratne, State Minister of Finance and Mass Media in Sri Lanka; Central Bank Governor Indrajit Coomaraswamy, Central Bank Governor of Sri Lanka; Vice-Chair Adrian Armas, Executive Director for Peru; Second Vice-Chair, Kenneth Ofori-Atta, Finance Minister of Ghana; an Marilou Uy, the G-24 Secretariat Director.

The Honorable Finance Minister is going to give us some opening remarks, and then we are going to take your questions. Thank you.

Mr. Ofori-Atta - Thank you very much, and welcome to this afternoon. I think we have had a pretty good day with the communique; and there are certainly some worries with regards to what we see in global growth, which seems good, but there are issues in the trade environment that we are witnessing, just worrying signs that we will have to watch and pray that there is more coordination in what we need to do.

I think we should really just open it up for questions.

Mr. Wickramaratne – Let me start with a few introductory remarks. At our meeting today, we welcomed basically the recovery of the global economy and growth and investment, and also we talked about the heightened concerns of the downsides in the medium term. We also are concerned as the G-24 about the trade friction that exists and the potential loss of confidence in a rules-based system, trading system; so we are calling on countries to attain an open, rules-based, multilateral, and equitable trading system that benefits all and strengthens the contribution of trade in the global economy.

We also continue to stress the importance of the global financial safety net with a quota-based, adequately-resourced IMF at its center. We reiterate our call for the completion of the IMF 15th General Review of Quotas, including an agreement on a revised quota formula, on an agreed timeline, and call on the IMFC to seek consistency among its members to ensure timely completion of that process.

The revised quota formula should further shift quotas from the advanced economies to the dynamic emerging markets developing economies to better reflect their growing weight in the global economy, while protecting the quota shares and [worries] of the poor countries.

On dealing with capital volatility, the role of the international policy coordination should be given more attention. Financial inclusion is also very important to our group and an inclusive growth agenda. In this regard, we brought attention to the need to address the decline in correspondent relationships, as well as the increased cost of remittances. And as you know, this is a part of the SDG goals itself.

On debt risk to debt sustainability in many countries, particularly low-income countries, has increased; therefore, responsible borrowing and policies to ensure fiscal sustainability will reduce these vulnerabilities. We are calling on the IMF and the World Bank to increase their assistance on liability management as an area of priority and to develop a more comprehensive and transparent debt reporting system.

We also emphasized the joint responsibilities of both debtors and creditors and call for a better framework for debt resolution. We stress the importance of international tax cooperation to develop fair tax rules and avert harmful tax practices. We have created a working group on tax policies and international tax cooperation to better articulate the specific concerns that are there.

On climate, we call for all countries to implement nationally determined contributions under the Paris Climate Agreement, and on the support of advanced countries to support climate actions in emerging and developing countries, including building resilience to climate-related disasters.

On the World Bank Group, we encourage timely and successful completion of the World Bank Group capital package and call for the conclusion of the IBRD shareholding review to achieve equitable voting power between developed and developing and transition countries with an outcome that has broad support from its members. So with that, as my colleague Kenneth said, we will open the floor.

Questioner - Just a quick question. I have not seen the briefing actually yet, so I have not looked at that in detail, but I am curious to know a little more about the working group on tax policy and cooperation, maybe the scope of work or what your expectations and hopes are for that working group to work on, focus, priorities perhaps.

Ms. Uy - Thanks very much, Nathan. Well, the working group is — we have decided that one way to be able to articulate better what the concerns might be on tax matters and international tax cooperation was to have a working group that would work over time to try and put forth some of the issues that we are concerned about. Now, part of it is peer learning in the sense that the working group will identify areas where there is great potential for, a greater scope for domestic resource mobilization and share experiences of safe practices that work and successes in some countries. The other is in the area of international tax cooperation. As you know, emerging markets and developing countries do have a lot of concerns regarding the taxation of multinationals, for example, much better ways to tax multinationals so that it would work better for them and at least gain more revenues from much more fair taxation of multinational corporations. So that is one area. The working group will then talk about how it would, how that process would evolve, how the G-24 could advocate for this in a way that is effective and the voice is heard.

There are new areas, too, in which emerging markets and developing countries are quite concerned about, for example, taxation of digital activities, which I believe is a concern for many countries; and so the working group will also try to discuss these emerging issues to see what views the group would express in these matters. Thank you.

Mr. Ofori-Atta - You know there is a report which seems to suggest that we lose anywhere from $50- to $70 billion a year in illicit financial flows. But the interesting part about that is that it is not really, corruption which is just 5 percent of that, but actual commercial activities constitute 65 percent. That is transfer pricing and balanced contract, et cetera. So as we look at the issues of some of us getting sort of more fiscally stable and macro stability, we then are beginning to focus a lot more on domestic revenue mobilization and for tightening leakages, et cetera. But these are huge amounts. That is about 1 trillion since we started being independent, so really focusing on that to ensure that the citizens and multinationals pay their fair due is going to be critical to financing huge infrastructure needs, health, and education that is required, so this is crucially important for us. Thank you.

Mr. Coomaraswamy - Just as a postscript, I think the main issues have been outlined by the Honorable Minister and Marilou Uy, but one other dimension which is somewhat different is the plight of small states, micro states, which were encouraged to develop as offshore financial centers some years back. This was advice given to them even by the multilaterals, but now there is a lot of pressure being put on them, because I think that developed countries find that they have lost a lot of their taxation, and they are having difficulty in sustaining their welfare states, et cetera. And these countries are now in a rather difficult predicament, having first been encouraged to develop as offshore financial centers, and now there is pressure on them to — essentially the viability of those offshore financial centers which they have created comes under pressure. So that is another dimension to the problem which probably needs to be looked at.

MS. ELNAGAR: Any further questions? OK. We wrap it here. Thank you very much for coming. Thank you.

IMF Communications Department

PRESS OFFICER: Randa Elnagar

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