Venice, Italy – July 10, 2021:
International Monetary Fund Managing Director Kristalina Georgieva made the
following statement today at the conclusion of the meeting of the G20 Finance
Ministers and Central Bank Governors:
“I am very encouraged by the substantial progress made by the G20 at this
meeting on a number of crucial issues. In particular, I want to recognize
the G20’s support for the historic agreement on a minimum corporate tax
rate. This will help countries preserve their corporate tax base and
mobilize revenue by ensuring that highly profitable companies pay their
fair share everywhere.
I want to commend the G20 for the focus on climate risks and role of carbon
pricing mechanisms. At the G20 Conference on Climate on Sunday, I intend 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 recognized 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.
Turning to the global economy, the recovery continues, broadly in line with
our 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.
In major advanced economies and some emerging market countries, growth is
accelerating– propelled by a combination of strong fiscal and monetary
policy support, and rapid vaccinations; but in many other
countries—particularly the poorest without access to vaccines and with
surging infection rates—growth is suppressed.
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. 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.
The World Bank, WHO, WTO and IMF, in close collaboration with ACT-A, has
formed a task force—a ‘war room’— to help achieve this goal and I very much
welcome the G20 support to prioritize acceleration of the delivery of
vaccines, diagnostics and therapeutics. By providing faster access to
vaccines to high-risk populations, more than half a million lives could be
saved this year. And a normal return to activity everywhere could add $9
trillion to the global economy through 2025—the $50 billion cost of this
pandemic plan pales by comparison.
Second, implement sound macroeconomic policies: they continue to play a pivotal role in securing the recovery.
Fiscal policy should provide well-designed support, tailored to country
circumstances, to protect the most vulnerable and minimize scarring. As
economies exit the crisis, policies should facilitate stronger, more
sustainable, and more inclusive growth.
Monetary policy should remain accommodative, as inflationary pressures are
likely to be temporary. But should a pick-up in inflation turn out to be
more permanent, some large economies further ahead in the recovery may need
to tighten sooner than expected. Central banks will need to communicate
policy intentions clearly to avoid triggering adverse spillovers. Should
tighter financial market conditions materialize sooner than anticipated,
the Fund is prepared to assist its members to ensure the recovery remains
on track.
Third, step up support to vulnerable countries
.
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.
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.
I greatly appreciate the support for these measures expressed by the G20 at
this meeting. There was also support for our efforts to help countries
facing unsustainable debt burdens.
Here, we are working closely with the World Bank and other partners to
ensure effective implementation of the Common Framework. I commend the
members of Chad’s Creditor Committee for their intensive work, which
provides leverage for debt relief from private creditors and the assurances
required for much-needed financing from the IMF and development partners. I
welcome the G20 call for the timely formation of the Creditor Committee for
Ethiopia to facilitate progress with review of the Fund-supported program
there.
Finally, I would like to congratulate the Government of Italy and Minister
of Economy and Finance Daniele Franco and Governor Ignazio Visco for their
very successful chairmanship of the first hybrid G20 meeting since the
pandemic. I would also like to thank the city and the people of Venice, as
always, for their warm and gracious hospitality.”