The finance ministers and central bank governors endorsed the updated G20 Action Plan, which includes a set of commitments to intensify international economic cooperation in response to the COVID-19 pandemic. The Action Plan calls for investments in climate action and digital technology in order to boost sustainable and inclusive growth during the post-crisis period. In addition, the Action Plan underscores the necessity of facilitating equitable global access to safe vaccines, therapeutics and diagnostics – particularly via the Access to COVID-19 Tools Accelerator (ACT-A) and its COVAX Facility – to ensure an effective response to the pandemic. The finance ministers and central bank governors reaffirmed their commitment to “review, update, track implementation of, and report on” the Action Plan on a regular basis. They also adopted the Third Progress Report on the Action Plan.
The finance ministers and central bank governors agreed to a final extension of the G20 Debt Service Suspension Initiative (DSSI) for the world’s poorest countries. The initiative, which was adopted in April 2020 in response to the COVID-19 pandemic, will apply until the end of 2021. Under the DSSI, eligible countries are granted deferrals on interest payments and principal payments. The aim is to give these countries more fiscal space to fight the pandemic. The finance ministers and central bank governors reaffirmed that official bilateral creditors should implement the initiative fully and transparently. In addition, they emphasised that debt treatments beyond payment deferrals may be necessary on a case-by-case basis. For this very reason, the G20 had already agreed on a “Common Framework for Debt Treatments beyond the DSSI” in November 2020. The finance ministers and central bank governors have achieved progress in implementing the Common Framework. This will enable debt restructuring – and, if appropriate, debt reduction for the most vulnerable countries – in the near future. With regard to the upcoming negotiations on initial cases under the Common Framework, the finance ministers and central bank governors agreed that all creditor countries should be included in the negotiations in an appropriate manner, and that private creditors involved in debt treatments under the Common Framework should provide comparable terms.
In addition to the above debt issues, the meeting also focused on ongoing efforts to reform the international corporate tax system in response to the challenges posed by the digital economy. The G20/OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) continues to work with urgency towards international solutions in this area. This work takes a “two-pillar” approach: Pillar 1 focuses on new rules for taxing the digital economy, and Pillar 2 focuses on the introduction of a global minimum effective tax based on a joint proposal made by Germany and France. The finance ministers and central bank governments reaffirmed their commitment to resolving the remaining open questions by mid-2021. Positive signals from the U.S. government and ongoing constructive talks have boosted confidence that solutions for both pillars will be reached by summer. The BEPS project was launched in 2013 with the aim of curbing harmful tax competition between tax jurisdictions and combating aggressive tax planning by multinational corporations.
The finance ministers and central bank governors shared the Financial Stability Board’s assessment regarding the potential risks associated with a premature discontinuation of pandemic-related support measures. They agreed that such measures must be targeted, and that steps to phase them out must be taken gradually. They also urged adequate communication when the time comes to phase out support measures, as such communication will play a crucial role in minimising financial stability risks. Addressing the issue of too-big-to-fail reforms, the finance ministers and central bank governors confirmed the resilience of the banking system and expressed their support for further efforts to boost the resilience of the non-bank financial intermediation sector, especially money market funds. They also reaffirmed the importance of a sustainable financial sector and welcomed the re-establishment of the Sustainable Finance Working Group.