Developed nations and some Group of 20 emerging countries will publish four-year debt strategies next month, even as they brace for news on U.S. plans to curb bond purchases, Russia’s deputy finance minister said.
Emerging-market countries including Russia, Mexico and Indonesia will join the G-7 and Australia in agreeing on the strategies at a September summit in St. Petersburg, Sergey Storchak said yesterday in an interview. The strategies will include projections through 2017 for debt-to-GDP ratios, fiscal deficits and the cyclically adjusted primary balance, which removes the effects of economic swings on budgets, he said.
“These are target levels, a benchmark, rather than firm commitments,” Storchak said in Moscow. “It will give greater confidence to investors, who are carefully following the debt stability of all financial-market participants, developed and developing.”
Russian President Vladimir Putin will host leaders from 20 of the largest developed and emerging economies in his hometown of St. Petersburg on Sept. 5-6. Less than two weeks later, the U.S. Federal Reserve’s monetary policy committee will discuss whether to reduce the scale of its $85 billion in monthly asset purchases.
While the Standard & Poor’s 500 Index has advanced 14.3 percent this year, speculation over the timing of the Fed’s tapering has prompted a sell-off in developing-market assets, with the MSCI Emerging Markets Index losing 13.2 percent.
Russia will offer countries a platform to discuss the Fed’s plans, as well as ways to ease the spillover effects on developing nations, according to Storchak. He declined to comment on statements this week by Fed officials indicating that the U.S. wouldn’t be able to give emerging markets more detailed guidance on their plans.
G-20 leaders will also probably sign off on a tax strategy drafted by the Organization for Economic Cooperation and Development that seeks to prevent large corporations from shifting profits to low-tax jurisdictions, according to Storchak.
The plan, backed primarily by Germany, France and the U.K. and also supported by Russia, won approval from a finance ministers meeting in Moscow in July. Leaders are also expected to approve proposals to increase automatic exchanges of tax information, Storchak said.
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