G7 Finance Ministerial Meeting: where are actions and answers?

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Press Release from Civil7

Rome, May 25, 2024, Stresa is another missed opportunity.

As civil society we advocated for a ministerial summit of shared responsibilities, concrete and ambitious actions with respect to the current polycrisis, to protect the weakest part of the population and for medium and low-income countries.

We see an acknowledgment of what exists but at the same time an over-optimism, a list of ongoing limited technical processes and no additional commitments that fit for purpose to the current challenges. Indeed: it is surprising how, with respect to the most urgent issues such as the resurgence of debt, we are witnessing a constant postponement regarding the processes underway in the G20 format, when the Common Framework has proven its failure, without any attempt to exercise the necessary ownership as historically industrialized countries and to deliver access to concessional financing in benefit of the most vulnerable countries. The status-quo and business-as-usual continues to contribute to the debt spiral.

We reiterate the need to support an immediate new Special Drawing Right (SDR) allocation to enable unconditional access to liquidity without increasing the debt burden, and act as a bridge to further reforms. The IMF and its shareholders should support regular SDR allocations that are needs-based, and to simplify the process for triggering these new issuances.

Multilateral Development Banks (MDBs)’ reform is crucial, but it needs to include its governance and the efforts to increase its capacity lending under concessional terms. The role that MDBs have in initiatives such as debt swaps, need to minimise the risk for borrower countries and not prioritise de-risking only for the private. MDBs need to increase the development effectiveness of projects, aiming to reduce inequalities, environmental care, and social needs; including the support of an external and independent evaluation of MDBs policies and programmes’ development impact.

We appreciate the G7’s commitment to “continue to work constructively with the Brazilian G20 Presidency to promote international tax cooperation” and “to increase our efforts towards progressive and fair taxation of individuals”. It is not sufficient, however, as declared by Minister Giorgetti in the final press conference, to acknowledge that there is resistance from “some countries” to the introduction of mechanisms for reallocating tax rights on the profits of the largest and most profitable multinationals. We need to address with greater determination the problems of equity that manifest themselves in the first pillar of the OECD G20 agreement of 2021. Significant resources are needed to credibly finance public policies to bring us closer to the Sustainable Development Goals of which the G7 were, initially, among the main supporters.

We stress the importance to ensure transparency, especially beneficial ownership transparency, global automatic exchange of information (that benefits all countries) and establish national asset registries until they all converge into a global asset registry, so that there is asset ownership information that allows the enforcement of wealth taxes (so that wealth taxes cannot be evaded or avoided).

On Climate, for example, the choice to welcome the Finance Track Menu of Policy Options for a Just Transition towards Net Zero, developed by the Finance track, seems truly minimalist to us. Within the Menu, what are the common strategic priorities of the G7 to propose and promote with partner countries?

With respect to trade, international supply chains are more fragile than in the past but is not a given condition. Is the result of an international governance of globalization which has failed in its objective of using exchanges as a tool for strengthening relations and bonds between Countries. Relationships that have been founded on increasing deregulation and competition, and not on cooperation and increasing transparency based on ensuring respect for human, social and environmental rights along physical and digital trade routes. It is not possible to wait for events in a geopolitical scenario that remains substantially unstable. We recommend that G7 introduce human rights and environmental due diligence legislation all along the supply chains and investments flows for the corporate, financial, and public sector, which includes strong mechanisms to ensure access to justice for victims, remediation, and safe and meaningful stakeholder engagement.

We need a shift in paradigm and we need it now!

Press Release from Civil7 HERE