Washington, G20 Finance: IMF reviews Italy's debt and deficit trends

• G7 in London, finance ministers reach historic agreement on global taxation

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October 13, 2021The G20 of finance ministers and central bankers in Washington, on the sidelines of the autumn meetings of the International Monetary Fund and the World Bank, focuses on "global economy, support for vulnerable countries and tax reform".

The Minister of Economy, Daniele Franco, and the governor of the Bank of Italy, Ignazio Visco, took part in the press conference of the Italian presidency of the G20.

Discussions at the G20 in Finance partly focused "on developments in inflation, while high inflation continues to reflect factors such as bottlenecks in global supply chains, which are deemed transitory and therefore destined to recede". This was stated by the governor of the Bank of Italy, Ignazio Visco, in the press conference at the end of the G20 on Finance. However, the picture "requires central banks to closely monitor" the development of price dynamics.

At the meeting of finance ministers and central bank governors within the G20 there was an agreement that "the recovery continues at a robust pace, but remains uneven and with significant downside risks. In particular, the pandemic remains the greater source of risk. Vaccination campaigns can play a central role ". "Economic policy must continue to provide support for the recovery for as long as necessary."

The members of the G20 "observed, even at a global level, an increase in inflation above expectations, caused by a pressure from demand on supply with bottlenecks on supplies which, however, should disappear: at the moment we do not see any pressure on the wages but a consistent effect of the increase in energy prices ". Visco recalled that most of these could be "transitory factors but which could take months before disappearing": in any case, especially on the part of central banks, there is attention "to other structural factors such as possible changes in the supply chain. global".

"The G20 is determined to keep the pandemic under control everywhere." Thus the Minister of Economy Daniele Franco during the press conference for the work of the financial G20 in Washington under the Italian presidency.

The joint G20 of Finance and Health Ministers, to be held on 29 October "will be an opportunity to take measures to strengthen the prevention of future pandemics, including with regard to financial governance and coordination".

National digital taxes, such as those of Italy and France, "will be removed in 2024" after the agreement on global taxation reached within the OECD. The indication was provided by the Minister of Economy, Daniele Franco, in the press conference at the end of the G20. "We expect the two new Pillars" of the agreement "to be implemented in 2023, at which point the national taxes will be removed," added the minister. 

"The global economic recovery continues at a solid pace, supported by the spread of vaccines and political support." This is what is read in the press release issued at the end of the G20 meeting of finance ministers and central bank governors, in which it is emphasized, "however, that the recovery of economic activity remains highly divergent between and within countries and exposed to downside risks, in particular due to the spread of new variants of Covid-19 and the uncertain pace of vaccinations ".

"After the historic agreement reached in July on the key components of the two pillars on the reallocation of profits of multinational companies and an effective global minimum tax, the Members approved the final political agreement to address the fiscal challenges arising from the digitalization of the economy and establish a more stable and fair international tax system ".

"G20 members" support the final political agreement "on a global minimum tax and on the taxation of multinational profits, defined last week by the OECD / G20 Inclusive Framework and which is based on the" historic agreement reached in July "in Venice.

"We reiterate that no so-called global stablecoin should start operations until all legal, regulatory and control requirements are adequately addressed through an appropriate architecture and adhering to applicable standards."

G20 members "will continue to support the recovery, avoiding any premature withdrawal of support measures, preserving financial stability and long-term fiscal sustainability and protecting against downside risks and negative spillovers". This is stated in the press release issued at the end of the meeting of finance ministers and central bank governors within the G20.

On the inflation front, it is specified, "central banks are closely monitoring current price dynamics" and "will act as needed to fulfill their mandates, while examining inflationary pressures" and "remaining committed to clear communication of political positions. ".

The expected positive trend for the Italian GDP should allow the debt / GDP ratio, despite a persistent budget deficit, to have started a downward path that from the peak of 155.8% recorded last year should lead it to 2026. to 146.5%.

It is the estimate made by the International Monetary Fund in the Fiscal Monitor which also traces the trend of the deficit which, from the 10.2% expected this year, should return to below 3% in 2024 (-2.9%) and then drop to 2%. , 4% in 2026.