Exclusive: Italian G20 Presidency calls for debt relief and new IMF drawing rights

ROME (Reuters) – Italy, this year’s chair of the Group of 20 Rich and Emerging Countries, will push its members to extend debt relief to poor countries struggling to cope with the coronavirus pandemic, told Reuters a senior official of the G20 finance team in Rome.

FILE PHOTO: US President Donald Trump, European Commission President Ursula von der Leyen, Japanese Prime Minister Yoshihide Suga and South Korean President Moon Jae-in are seen on a screen before the start of the virtual meeting of the G20 organized by Saudi Arabia, in Brussels, Belgium November 21, 2020. REUTERS / Yves Herman / Pool / File Photo

Italy was also confident that Biden’s presidency would announce a more cooperative position on the part of the United States on international financial cooperation, especially in areas such as climate change and aid to poorer states.

“We need to give fiscal space to low-income countries in greater difficulty,” said Gelsomina Vigliotti, Italy’s treasury director general for international financial relations, outlining the country’s priorities for her presidency in an interview.

Vigliotti said Italy, which took over as head of the G20 in December, would push to extend the Debt Service Suspension Initiative (DSSI) freezing bilateral service payments until the end of the year. of debt for more than 40 countries.

The restrictions adopted to combat the pandemic have hit poor countries particularly hard and threaten to push millions of people into extreme poverty. Many countries that were already facing crushing debt levels before the crisis are having to restructure their loans or face default.

The DSSI, promoted by the International Monetary Fund and the World Bank and endorsed by the G20, was introduced in May of last year and is currently scheduled to expire in June.

“Debt will certainly be a very important theme of the Italian presidency,” said Vigliotti.

To further help poor countries, Italy will also urge the G20 to support the IMF’s new $ 500 billion issue of its own currency, known as Special Drawing Rights (SDRs), the Italian official said. G20, describing this as “a top priority”.

The former US administration of Donald Trump had blocked the idea of ​​a new issuance of SDRs, a move similar to a central bank printing money, saying it would provide more resources to richer countries because their allocation would be proportional. to their participation in the IMF.

Vigliotti rejected this argument, saying that rich countries that do not need their allocated SDRs can return them to the IMF facility which can in turn lend to the poor.

“The aim is to ensure that a new allocation of SDRs is made available to the poorest countries,” she said, adding that there was “general consensus” on the subject within the G20.

“We expect the new administration (Joe) Biden to take a different stance on the issue,” she said.

Separately, a French G20 official also told Reuters that Paris was encouraged by signs that Biden would not block new SDRs like Trump did.

In general, the change of government in the United States has already had a “tangible” impact on G20 affairs, said Vigliotti, with a more constructive and multilateral approach to climate change and sustainable financial investments.

Italy’s G20 presidency got off to a rocky start with the collapse of the government in Rome when a junior partner withdrew from the ruling coalition. Vigliotti played down domestic political turmoil, saying it would not change the country’s G20 agenda already agreed with its partners.

Promoting a fairer and more sustainable international tax system will be another priority for the Italian Presidency, she said.

Rome hopes to negotiate a broad agreement by June on taxation of the digital economy and minimum levels of corporate taxation around the world, she said, on the basis of preparatory work carried out by the United Nations. economic cooperation and development.

“Failure to reach an agreement would have negative consequences, it would weaken confidence in the ability to find multilateral solutions,” she warned.

Additional reporting by Crispian Balmer in Rome and Leigh Thomas in Paris; Editing by Toby Chopra

About Sharon Joseph

Check Also

Zambia defaults for African debt relief

Indebted Zambia and the International Monetary Fund (IMF) locked in difficult talks for a possible …

Leave a Reply

Your email address will not be published. Required fields are marked *