G20 India: Debt Restructuring, Global Tax Agenda Among Top US Priorities at G20 Finance Heads Meet

The United States will pitch to finalise the debt treatment plans for Ghana And Sri Lanka; continue to stress on support for Ukraine while showing support for the implementation of the capital adequacy framework for MDB reform and fair taxation of multinational firms at the G20 Finance Ministers Meet at Gandhinagar, starting Monday.

Speaking to the media ahead of third Finance Ministers and Central Bank Governor's meet, United States Treasury Secretary Janet Yellen also noted that the US is in support of the swift implementation of the capital adequacy framework and the recommendations and the G20 independent expert group report reccomendations.

Yellen's comments come at a time when the joint report by former finance commision chair NK Singh and Professor Larry Summers is being circulated among international leadership. The first volume of the report will be made public on July 18.

"But I believe only we can explore capital increases, after considering reforms laid out in the report. We should build better banks not just bigger ones," she told media on Sunday.

Adding to need for reforms from multilateral development banks in contributing more to global challenges, the US is working with the World Bank and the regional development banks to better leverage resources.

"Our reforms to the World Bank's balance sheet will responsibly unlock as much as $50 billion in additional lending capacity over the next decade. As part of our evolution agenda, we estimate that the MDBs as a system could unlock $200 billion over the next decade just from the measures already being implemented or under deliberation," she said.

As part of the discussion on the subject, the US is looking to work with the World Bank on-

• Operationalising targeted use of concessional financing for global challenges.

• Built a mechanism to allocate additional resources to countries that seek Bank financing to combat global challenges.

• Explore options for lending to sub-sovereign and supra-sovereign actors, like COVAX, to address global challenges.

• Streamline the climate finance architecture – a significant source of concessional finance

U.S Agenda at G20

The United States is looking to push strongly on alleviating debt distress and coming up with a debt restructuring plan for Ghana and Sri Lanka, with global vulnerabilities post-pandemic and the war in Ukraine amplifying the need for it. The economic case of decisive action is clear, she added.

Evidencing the progress made in the debt restructuring in Zambia's case, Yellen noted that she would continue to push for all bilateral creditors to overcome differences and agree on common principals for debt restructuring.

"This week I will continue to push for full and timely participation of all bilateral creditors on pending debt restructuring cases," she said. The treasury secretary was also recently in China where she discussed topics of debt distress and climate change. The two countries also chair the sustainable finance working group at the G20.

Further, she noted that through the third FMCBG meeting, the US hopes that countries would arrive at plans for Ghana and Sri Lanka so their debt treatments can be finalised by the International Monetary Fund and can begin implementation by this fall.

The United States also sided the implementation of the global tax agenda and the implementation of the global minimum tax.

As of October 2021, over 135 countries and jurisdictions joined a new two-pillar plan to reform international taxation rules, according to the website of the Organisation for Economic Cooperation and Development

Today, many countries are moving forward to implement the global minimum tax on the earnings of large multinationals, which will end the race to the bottom on corporate tax rates, Yellen noted

"We continue to work together in the Inclusive Framework to ensure consistent implementation and we expect additional published guidance soon...We are very close to reaching agreement on the technical details of that reallocation, and we are committed to doing so soon," Yellen added.

Continuing Ukraine Support: Yellen

Yellen also took the opportunity to stress the country's continued support for Ukraine.

"We will also continue to cut off Russia's access to the military equipment and technologies that it needs to wage war against Ukraine. One of our core goals this year is to combat Russia's efforts to evade our sanctions. Our coalition is building on the actions we've taken in recent months to crack down on these efforts," she noted.