G20 puts growth before austerity, seeks to calm markets

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July 20, 2013 by apicomely

Draft G20 finance ministers communique

With youth unemployment rates approaching 60 percent in euro zone strugglers Greece and Spain, the growth versus austerity debate has shifted – reflected in the fact that G20 finance and labor ministers held a joint session on Friday. The crisis in the euro-zone periphery has been exacerbated by capital outflows, and the communique pledged to move “decisively” towards creating a banking union in Europe that could revive cross-border lending. “The priority in the short term is growth, growth, growth,” French Finance Minister Pierre Moscovici told reporters. Unlike at previous G20 gatherings, exchange rates and the threat of competitive devaluations barely figured, delegates said. TREAD WITH CARE A paper that International Monetary Fund staff prepared for the Moscow meeting warned financial market turmoil could deepen unless policymakers were careful.

5. We are determined to continue progress with rebalancing of global demand, which requires internal rebalancing through structural reforms and exchange rate flexibility. We reiterate our commitments to move more rapidly toward more market-oriented exchange rate systems and to refrain from competitive devaluation. We will resist all forms of protectionism and keep our markets open. Large surplus economies should consider taking further steps to boost domestic sources of growth, while deficit economies should implement measures to improve competitiveness.

German finance minister says multinationals must pay fair taxes

Credit: Reuters/Fabrizio Bensch By Gernot Heller BERLIN | Thu Jul 18, 2013 10:36am BST BERLIN (Reuters) – German Finance Minister Wolfgang Schaeuble will push to stop multinational companies shifting profits to tax havens and is confident the Group of 20 nations meeting in Moscow this week will agree on common standards. Schaeuble told Reuters in an interview on Thursday an action plan to be presented to G20 finance ministers by the Organisation for Economic Co-operation and Development would set clear and ambitious targets on tax evasion. “Multinational companies, too, must pay adequate taxes, and they must do so where they are economically active,” Schaeuble said in the interview, conducted by email. “The OECD action plan as it is on the table in Moscow now is a milestone in this respect.” A preliminary draft of the OECD’s plan, seen by Reuters, showed the organisation had already identified a number of specific profit-shifting schemes and aimed for agreement on specific changes to international tax rules in one to two years. Corporate taxation has become a hot political topic since media reports highlighting how multinationals reduce their tax bills struck a nerve with voters themselves increasingly pinched by higher taxes.

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