G20’s push for growth in Seoul fails to protect the poor

G20 leaders meeting in Seoul last week issued a lengthy communiqué accompanied by an annex fleshing out the “Seoul development consensus for shared growth.” The recognition that “there is no ‘one-size-fits-all’ formula for development success and that developing countries must take the lead in designing and implementing development strategies” is a welcome one.

However, the G20 call for “inclusive and sustainable growth” fails to provide concrete measures to ensure that poor people in poor countries reap the benefits of economic growth. The text fails to provide a specific plan to combat tax evasion by multinational companies and to ensure that the International Financial Institutions, donors and the private sector comply with the highest standards of responsible financing and investment in poor countries.

Translating words into action requires binding commitments which G20 leaders in Seoul were not ready to make. Will France, the incoming G20 chair, deliver?

“Inclusive growth” takes more than words

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Clampdown on tax havens: Where does the International Finance Corporation stand?

Should the World Bank’s private sector lending arm, the International Finance Corporation (IFC) set a clear policy regulating its investments in companies registered in tax havens?

This question led a few weeks ago to one of the most heated discussions ever on the Executive Board of this institution. Last year, European NGOs asked their Executive Directors at the World Bank to set up binding guidelines to ban IFC investments in companies operating through tax havens. In response to pressure by civil society, the World Bank has taken swift action to start up this discussion; however, the Bank has not gone beyond general statements of principle and continues supporting companies using secrecy jurisdictions.

What does the World Bank IFC say on the use of tax havens?

In October 2009 European NGOs prompted their Executive Directors at the World Bank to request strong action to stop investing in companies that are registered in tax havens. In response to the NGO request, the Executive Board took swift action and issued, on April 2010, a public position on “Off-shore financial centers and tax evasion in World Bank operations.” In this note, the World Bank Group states its commitment to “the integrity and transparency of global financial markets” and expresses concerns on the “the issue of offshore financial centers (OFCs) and about the potential risk of tax abuse and the threat to good governance that they present.”

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Taxing pirate banking could help eradicate world poverty

At its annual conference last week, the Task Force on Financial Integrity and Economic Development identified concrete measures that could help developing countries to mobilise the resources needed to achieve the Millennium Developing Goals (MDGs) and go even further to help eradicate world poverty and lay the ground for a fairer global financial system.

These measures include:

• taxing the USD 15 to 20 trillion of private wealth sitting in tax havens
• establishing accounting standards that oblige multinational companies to report their profits earned in every country
• or setting rules for the automatic exchange of tax information between countries.

The Task Force is a global coalition of governments and CSOs including Eurodad, working to address inequalities in the financial system that penalise billions of people. This year’s conference focused on the actions needed to achieve greater transparency in the global financial system.

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