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G20 Ministers Vow To Refrain From Currency Warfare

Finance ministers and central-bank governors pose for a family photo during a meeting of G20 finance ministers and central-bank governors at the Manezh Exhibition Center in Moscow on February 16.
Finance ministers and central-bank governors pose for a family photo during a meeting of G20 finance ministers and central-bank governors at the Manezh Exhibition Center in Moscow on February 16.

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Group of 20 (G20) finance ministers have pledged to refrain from devaluing their currencies to gain economic advantage and to crack down on corporate tax avoidance.

A two-day meeting in Moscow ended on February 16 with a joint communique that included a promise that the G20 member states will "refrain from competitive devaluation" and "resist all forms of protectionism and keep our markets open."

There have been concerns governments might move to devalue their currencies to generate economic growth.

However, International Monetary Fund chief Christine Lagarde said that despite a "lot of talk" about a currency war, "we have not seen any such thing as currency war. We have heard currency worries not currency war. We have not seen confrontation but a dialogue, deliberation, discussions and clearly this G20 Moscow meeting has been extremely helpful and productive in that respect."

In their communique, the ministers of the world's 20 leading industrial and developing countries also said they were "determined to develop measures to address base erosion and profit shifting" by multinational companies.

They pledged to do that in coordination with the Organization for Cooperation and Economic Development (OECD), which is preparing an action plan on measures to be taken to combat corporate tax avoidance.

Britain, France, and Germany were the main movers behind the drive, which comes as cash-strapped governments try to find ways to inject new funds into their budgets.

Addressing a press conference on the sidelines of the G20 meeting earlier in the day, British Chancellor of the Exchequer George Osborne said international action was needed to crack down on companies that transfer profits from their home country to another in order to pay lower taxes.

"Now, we all want international businesses located in our countries and doing business in our countries, and employing people in our countries, and certainly Britain wants to have one of the most competitive tax systems in the world," Osborne said.

"But we do want businesses to pay the taxes that we set in our countries. And that cannot be achieved by one country alone."

The OECD's action plan is to be submitted to a G20 meeting in July.

In a statement, OECD Secretary-General Angel Gurria said, "As governments and their citizens are struggling to make ends meet, it is critical that all taxpayers -- private and corporate -- pay their fair amount of taxes."

The G20 includes both the world's leading and emerging economies, accounting for 90 percent of the world economy.

The G20 meeting is being hosted by Russia for the first time as it holds the presidency of the grouping.

With reporting by AFP and AP

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