US Treasury Secretary Janet Yellen emphasized that increasing support for war-torn Ukraine is the most effective measure to bolster the global economy. Yellen made this assertion while attending a G20 finance ministers summit in India, where she also highlighted the importance of strengthening emerging economies and addressing debt distress.
Furthermore, Yellen firmly dismissed the notion that providing aid to Ukraine would come at the expense of developing nations, pledging to counter any criticisms regarding this tradeoff.
Yellen expressed her view that ending the ongoing conflict in Ukraine is not only a moral imperative but also the most beneficial action for the global economy. Speaking to reporters in Gandhinagar, the host city of the G20 summit, she emphasized the need to prioritize efforts to resolve the war’s devastating consequences. Yellen further underlined the significance of initiatives aimed at tackling debt distress in struggling economies, implementing bank reforms, and securing a global tax agreement. She cautioned against premature discussions regarding the removal of tariffs on China.
The invasion of Ukraine by Russia, two major exporters of wheat worldwide, had far-reaching implications, causing significant disruptions in economies around the globe and leading to surging food and fuel prices. The G7 leaders pledged their unwavering support to Ukraine in their recent summit in Lithuania, vowing to stand by the country until Russia’s invasion is defeated.
For G20 host India, the topic of Ukraine presents a delicate situation as the nation has refrained from condemning Russia’s invasion. However, India is also a member of the Quad grouping, which includes Australia, the United States, and Japan, signaling its alignment with like-minded countries.
Yellen also discussed the progress made in debt restructuring in Zambia, a topic she engaged in during her recent visit to Beijing, where she held discussions with Chinese officials. She expressed optimism that debt treatments for Ghana and Sri Lanka would soon be finalized. Regarding the trade war initiated by former US President Donald Trump, Yellen maintained that it was premature to consider lifting restrictions imposed on China, as the concerns regarding unfair trade practices still remain unaddressed.
Highlighting the need to address the growing issue of debt distress, Yellen underscored ongoing efforts to reform multilateral development banks, including the World Bank and regional lenders. These efforts, she believes, could unlock $200 billion over the next decade. Yellen further revealed that over half of all low-income countries are currently facing or near debt distress, indicating a doubling of the figure since 2015.
The G20 finance ministers and central bank heads are scheduled to convene for discussions on Monday and Tuesday. World Bank chief Ajay Banga expressed his concern about a “deep mistrust” that is subtly driving a wedge between the Global North and South precisely when unity is most needed. Banga highlighted various factors contributing to this division, including the climate change crisis, post-pandemic recovery efforts, the conflict in Ukraine, and a lack of progress in the fight against poverty.
Banga, in an op-ed, expressed the frustrations of the Global South, explaining how they often bear the brunt of the prosperity enjoyed by others. He cited concerns that promised resources might be diverted to Ukraine’s reconstruction, energy rules are not universally applied, and the younger generation may be trapped in a cycle of poverty.
The International Monetary Fund (IMF) stressed the importance of finding collaborative solutions to address the weakening global economy. In a statement issued last week, the IMF emphasized the need for joint action to combat rising economic fragmentation, slowing growth, and high inflation.
Cryptocurrency regulations and facilitating access to financing for climate change mitigation and adaptation in developing nations will also be key topics of discussion at the G20 summit. Banga highlighted the significance of climate change as a matter of survival for the Global South, as it experiences stronger hurricanes, a scarcity of heat-resistant seeds, the destruction of farms and towns due to drought, and the devastation caused by floods.
Furthermore, during the G20 talks, the recently agreed-upon first step towards a fairer distribution of tax revenues from multinational corporations will be addressed. This agreement, supported by 138 countries, aims to rectify the current situation where multinationals, particularly tech firms, can easily shift profits to countries with lower tax rates despite conducting only a fraction of their operations there.
