Macron calls for fresh overhaul of global taxation to support climate finance: Paris Summit

Emmanuel Macron called at a summit in Paris for another overhaul of the global taxation system to finance the fight against poverty and climate change, building on recent efforts for a minimum levy on corporations.

The French president hosted world leaders including Brazil’s Luiz Inacio Lula da Silva and Cyril Ramaphosa of South Africa, as well as US Treasury Secretary Janet Yellen and the Chinese premier, Li Qiang, to discuss new ways to raise climate financing.

The talks aim to build momentum for an overhaul of the global lending architecture so that multilateral institutions like the World Bank can do more to help developing nations deal with climate change and raise private investment. Bloomberg Philanthropies is one of the official sponsors of the Summit for a New Global Financing Pact.

Brazilian President Luiz Inacio Lula da Silva urged the international community to address global inequality and treat it like a challenge as important as climate change. If economic and education inequality are not tackled urgently, climate concerns will become a joke compared with the magnitude of the problems facing the world, he said. Still, Lula insisted that Brazil will meet all its environmental commitments and doesn’t need to “cut trees.”

The Brazilian president took a swipe at the world order, blasting the United Nations and Bretton Woods institutions for being incapable of addressing global issues and assisting those in need. He said global trade should be conducted using a variety of currencies, not only the US dollar.

Lula also criticised the European Union for the so-called side-letter it sent to the Mercosur bloc of South American countries with new demands ahead of a potential trade agreement.

Green funding

German Chancellor Olaf Scholz said it’s time for action to provide developing countries with better access to the funds needed to boost investment in the green transition.

“It’s important that we always walk as we talk,” Scholz said at the summit. “So it’s always important that especially the economically more stable and successful countries make their contributions and that they stick to the things they say all the time.”

Scholz said private companies will also play an important role in providing the needed funds and that the G-20 process known as Compact for Africa is key in pushing ahead with reforms on the ground in those countries so that businesses are more willing to invest. Public subsidies alone cannot solve the problem, the chancellor added.

China’s stand

Premier Li Qiang told the summit that the Chinese economy has shown “upward momentum” this year and fundamentals for long-term sound economic development are unchanged.

He reiterated that China opposes de-coupling and said the country’s development isn’t a threat to the world, but a big opportunity instead.

He said China will join hands with other nations on Green development and improving global financial governance, and he urged developed nations to take responsibility on climate change.

Healthcare in developing economies

A EUR1.5bn platform to stimulate investment in primary healthcare in developing economies has been launched by a consortium comprised of the African Development Bank, European Investment Bank, Islamic Development Bank and the World Health Organization.

The platform will offer concessional loans and grants and focus on serving the most vulnerable, according to a statement by the group.

“The climate crisis is a health crisis,” said Vanessa Kerry, director-general special envoy for climate change and health at the WHO. “No country is immune.”

The platform was welcomed by Mia Mottley, prime minister of Barbados. Our task is “about securing a safer world and planet, and that means dealing with global public goods,” she said. “There’s no better way than through primary healthcare.”

Future-proofing economies

Climate change is a key issue for central banks as it affects inflation and their balance sheets, and because it matters for commercial banks under their supervision, European Central Bank President Christine Lagarde said.

“We have made climate change a priority in our strategy,” Lagarde said. “We do that because climate change affects inflation, and inflation is a beast that all central bankers — whether they wear a green jacket or not — want to tame or discipline.”

She added: “We must forge ahead with a global transition to ensure our economies are future-proof.”

Global taxation for poverty, climate

Emmanuel Macron called for another overhaul of the global taxation system to finance the fight against poverty and climate change, building on recent efforts for a minimum levy on corporations.

The new taxation could hit airline tickets, financial transactions or shipping, the French president said at the summit. For it to be successful, countries would have to work together to avoid businesses relocating activity to avoid national levies, he said.

“A century ago we said socialism in one country doesn’t work — well, international tax in one country doesn’t work either,” Macron said on France Info radio on the sidelines of the summit.

France will boost the volume of International Monetary Fund resources it channels back to the institution for lending to the poorest countries facing climate risks, Emmanuel Macron told France Info radio on the sidelines of the summit.

The French president set a target two years ago to boost financing for poor countries by having the richest lend 20% of their share of IMF reserve assets known as Special Drawing Rights.

“We have pushed everyone to meet their commitments and now we will recycle 40 per cent of our SDR,” he said.

Zambia’s debt relief win

Zambia reached an agreement in principle to restructure $6.3 billion of debt with bilateral lenders, setting a precedent for a growing list of countries struggling to service their liabilities. The nation’s dollar bonds rose.

On Twitter, Zambian President Hakainde Hichilema called the agreement “a significant milestone in our journey toward economic recovery and growth.”

The accord marks the first major relief won by a developing country under the Group of 20 nations’ Common Framework that brings the traditional creditor nations of the Paris Club around the same negotiating table with China and India.

 

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