IRIA News

Key takeaways from G20 Summit 2021

The G20 Summit 2021 was held on October 30-31 and the in-person meeting took place for the first time in two years. This year’s G20 Summit was held under the Italian Presidency and focused on three pillars of action: People, Planet, Prosperity. The world leaders held discussions on climate change, the COVID-19 pandemic, economic recovery agendas and agreed on tax deals and global economic actions.

On international taxation, the G20 leaders approved an agreement, which will subject multinational firms to a minimum of 15% tax, as part of the struggle to build “a more stable and fairer international tax system”. The American internet companies, Google, Facebook, Amazon, and Apple that have based themselves in low-tax countries to minimize their tax bills were the particular targets of the new global regulation.

The G20 leaders also called on relevant working groups within the OECD and G20 “to swiftly develop the model rules and multilateral instruments … with a view to ensure that the new rules will come into effect at global level in 2023.”

The G20 leaders also addressed the COVID-19 vaccination issues. The world leaders pledged to support the WHO’s goal of vaccinating at least 40% of the world’s population by 2021, and 70% by the middle of 2022, by increasing the vaccine supplies in developing countries and removing supply and financing constraints.

They also vowed to “work together towards the recognition of Covid-19 vaccines deemed safe and efficacious by the WHO,” amid Russian President Vladimir Putin’s complaints about the lack of international approval for Russia’s Sputnik V vaccine.

On the inflation issue, the G20 leaders said “central banks are monitoring current price dynamics closely” and “will act as needed to meet their mandates, including price stability, while looking through inflation pressures where they are transitory and remaining committed to clear communication of policy stances.” They also pledged to “remain vigilant to the global challenges that impacting on our economies, such as disruptions in supply chains, (and) monitor and address these issues as our economies recover.”

“We will continue to sustain the recovery, avoiding any premature withdrawal of support measures, while preserving financial stability and long-term fiscal sustainability and safeguarding against downside risks and negative spillovers,” they said.

The world leaders also set a new target of channeling $100bn towards the poorest nations, coming from the $650 billion pot made available by the International Monetary Fund (IMF) via a fresh issuance of its Special Drawing Rights (SDR). Although SDRs are not a currency, it can be used by developing countries as a reserve currency that stabilizes the value of their domestic currency or can be converted into stronger currencies to back investments.

During the summit, World Bank President David Malpass called on leaders of the G20 rich nations to speed up work on debt restructuring for low-income countries, including a freeze on debt payments and mandatory participation of private creditors.

On energy and climate issues, world leaders agreed to limit global warming but fell short on a zero-emissions target. “Keeping 1.5 degrees within reach will require meaningful and effective actions and commitment by all countries, taking into account different approaches,” the G20 said in their final communique. The world leaders also pledged to reach a target of net-zero carbon emissions “by or around mid-century”, but failed to set a clear 2050 date, as summit host and campaigners hoped.

Separately on the sidelines of the meeting, the leaders of the U.S., UK, France, and Germany met to discuss their “grave and growing concern” over Iran’s nuclear activities. In a joint statement, the leaders said that “if Iran continued its nuclear advances, that would jeopardize the possibility of it returning to the 2015 nuclear deal with the U.S. and economic sanctions being lifted” and urged Iranian President Ebrahim Raisi to “change course… to avoid a dangerous escalation”.

The G20 members include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union.

Five of the 20 leaders did not attend this year’s G20 in-person meeting in Rome. Russian President Vladimir Putin and Chinese President Xi Jinping both participated in the summit via video link, and Mexican President Andrés Manuel López Obrador sent his Secretary of Foreign Affairs Marcelo Ebrard on his behalf. While South African President Cyril Ramaphosa and Japanese Prime Minister Fumio Kishida both skipped the summit meeting due to elections in their respective countries.

Netherlands Prime Minister Mark Rutte, Singapore’s Prime Minister Lee Hsien Loong, Spain’s Prime Minister Pedro Sánchez, Chairperson of NEPAD, Rwanda’s Paul Kagame, Chairperson of Association of Southeast Asian Nations, Brunei’s Hassanal Bolkiah, and Chairperson of the African Union, Congo’s Félix Tshisekedi, were also invited as guests during the G20 Summit 2021.