VILNIUS - Lithuania’s Finance Minister Rimantas Sadzius, representing the Lithuanian Presidency of the Council of the EU, participated in the G20 finance ministers and central bank governors’ meeting in Moscow on July 20, reports ELTA. The participants at the meeting discussed the directions to be followed in order to support greater private sector participation in long-term investment funding and endorsed the instruments in the fight against tax fraud and evasion.
“The active role of the private sector in long-term investment in infrastructure as well as small- and medium-sized enterprises would allow countries to manage the budgetary resources more efficiently and contribute to economic growth. We discussed the directions in which we should go to create a favorable environment. On the decisions of tax issues, we are aiming at transparency and prevention of tax avoidance, which negatively affects the public finances,” Minister Sadzius said. The Lithuanian Presidency of the EU Council, together with the European Commission and the European Central Bank, represented the EU in the G20 meeting.
G20 finance ministers and central bank governors stressed the importance of long-term financing of investments for economic growth and discussed how to improve the efficiency of public investment. In order to encourage the private sector to contribute to the financing more actively, it is proposed to strengthen the private and public partnership by improving the investment climate as well as the processes and transparency of planning, prioritization and funding of investment projects.
In the field of taxation, the ministers and governors approved an action plan and its 15 points, aimed at addressing tax base erosion and profit shifting, the phenomenon when multi-national corporations can exploit the gaps in laws to artificially reduce their taxes. They also endorsed the proposal regarding a new uniform global standard of automatic exchange of tax information to be introduced.
The general atmosphere at the summit, however, was one where participants know they face a fragile recovery and the threat of a new economic slowdown, reported Reuters. The G20, therefore, agreed to prioritize boosting growth and jobs and for now to pay less attention to reducing swollen budget deficits.
At a meeting in an exhibition hall just outside the Kremlin walls, the finance chiefs from the top 20 advanced and emerging economies in the world showed an unusual unanimity over the risks and priorities for the economy. Spooked by the depth of slowdowns over the last years, there was clear agreement that for now governments had to go full out to create jobs, boost demand and increase productivity.
The economic recovery is “fragile and uneven,” the finance ministers and central bank chiefs said in their final statement, while unemployment was deemed “excessively high” in some countries.
“Global economic conditions remain challenging,” admitted IMF managing director Christine Lagarde.
While the United States and Japan show signs of sustainable recoveries, growth in the eurozone remains sluggish and even Asian powerhouse China is now showing a decline in its output growth. “The debate between growth and austerity seems to have come to an end, as captured in the G20’s strong statement on growth and jobs,” said one senior U.S. treasury official.
The G20 participants also discussed reform of the international financial architecture, including the International Monetary Fund’s quota formula review, energy sustainability, commodity market transparency and other issues.