GANDHINAGAR: G20 finance chiefs ended talks in India on Tuesday with disagreement over Russia’s war in Ukraine, limited progress on debt restructuring and warnings that divisions between rich and poor nations risked deepening poverty.
Many countries are still recovering from the coronavirus pandemic and drastic commodity price surges triggered by Russia’s invasion of Ukraine, while climate change is affecting some of the poorest countries least able to cope.
The Group of 20 major economies failed to agree on a joint statement “because we still don’t have a common language on the Russia-Ukraine war”, but progress had been made on key issues, Indian Finance Minister Nirmala Sitharaman told reporters after the two-day summit of finance ministers and central bank governors in Gandhinagar.
The conflict in Ukraine created a devastating global economic impact sending food prices soaring, with diplomatic loyalties torn between Russia and the West.
“Most members strongly condemned the war in Ukraine and stressed that it is causing immense human suffering and exacerbating existing fragilities in the global economy,” a G20 outcome document read.
The war was “constraining growth, increasing inflation, disrupting supply chains, heightening energy and food insecurity, and elevating financial stability risks”, it added.
‘Paying the price’
International Monetary Fund chief Kristalina Georgieva said that “the world today is more shock-prone and fragile, with climate change, pandemics, and Russia’s invasion of Ukraine all causing widespread turmoil”.The G20 talks have also focused on multilateral development banks’ reform, cryptocurrency regulations, and easier access to financing to mitigate and adapt to the impact of climate change.
The new head of the World Bank said that growing divides between rich and poor nations risked deepening poverty in the developing world.
“The thing that keeps me up at night is a mistrust that is quietly pulling the Global North and South apart at a time when we need to be uniting,” Ajay Banga said.
“The Global South’s frustration is understandable. In many ways they are paying the price for our prosperity,” said Indian-born Banga, a naturalised American citizen who took up the bank post last month after being nominated by US President Joe Biden.
“When they should be ascendant, they’re concerned promised resources will be diverted to Ukraine’s reconstruction, they feel energy rules aren’t applied evenly, constraining ambition, and they’re worried the grip of poverty will pull down another generation.” The World Bank said it is working to increase its financial capability — including by raising hybrid capital from shareholders — to spur growth and jobs, but said the future economy could not rely on expansion at the cost of the environment. “The simple truth is: We cannot endure another period of emission-intensive growth,” Banga said.
The United States has said efforts to reform multilateral lenders such as the World Bank and other regional institutions could unlock $200 billion over the next decade.
G20 finance ministers also discussed multilateral development banks’ reform, tax, cryptocurrency regulations and climate change adaption finance. Debt restructuring deals for low-income nations were also a key focus.
China, the world’s second-largest economy and a major lender to several stressed, low-income countries in Asia and Africa, has so far resisted any one-size-fits-all debt restructuring formula.
China’s finance ministry said multilateral creditors should handle debt “in accordance with the principle of common action and fair burden”, and that the G20 should “objectively analyse the causes of debt problems of vulnerable countries”.
Published in Dawn, July 19th, 2023
