G20 focuses on tax loopholes
MOSCOW: The Group of 20 nations backed a tax plan yesterday that takes aim at the loopholes used by multinational firms and responds to anger among voters hit with higher tax bills to cover soaring national debts.
Finance ministers and central bankers also focused on charting a course towards global economic recovery, and seeking to calm worried financial markets.
The G20 now faces a multispeed global economy in which only the US appears to be nearing a self-sustaining recovery.
China is suffering a slowdown amid doubts over the stability of its financial system, Japan has only recently embarked on a radical fiscal and monetary experiment, and Europe’s economy is more stop than go.
Collective efforts to balance the prospect of a withdrawal of US monetary stimulus against expansionary policies are needed for the struggling economies.
Chairman Ben Bernanke’s guidance in May that the Fed may start to wind down its $85billion (R841bn) in monthly bond purchases – intended to ease the flow of credit – triggered a steep sell-off in stocks and bonds, and a flight to the dollar.
Investors were calmed by dovish testimony to the US Congress this week by Bernanke, who is not coming to Moscow. Yet emerging markets have underperformed.
There will be some focus on central bank’s giving so-called forward guidance, essentially managing market expectations. “(It is) crucial for preventing serious volatility on financial markets,” Russian Finance Minister Anton Siluanov said.
The Brics caucus – which includes South Africa – was also due to meet. – Reuters