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Finance ministers and central bankers from the world’s biggest economies were divided on a variety of issues, including Russia’s war in Ukraine and ways to deal with climate change, according to a Group of 20 statement released three days later than usual due to those tensions.
“Many members strongly condemned Russia’s war against Ukraine and expressed the view that Russia’s illegal, unjustified and unprovoked war of aggression against Ukraine is impairing the global economic recovery,” according to the G-20 “Chair’s Summary” issued on Sunday by Indonesia, which leads the body this year. The statement was based on meetings on Wednesday and Thursday that took place as part of the International Monetary Fund and World Bank annual meetings in Washington. Normally such a document is released within hours of the end of discussions. But the clashes this time around made it more challenging to produce the summary — particularly with other risks darkening the outlook for the world economy. In addition, the document is usually released as a communique reflecting the consensus of members; however, agreement has become much tougher since the start of Russian President Vladimir Putin’s aggression. The G-20 includes numerous nations like the US, Germany and UK that steadfastly oppose the Ukraine invasion, but also others such as China and India who have been less clear in their views, or like Brazil, which has continued to try to negotiate cheaper diesel purchases from Russia. “A few of these members noted that the sanctions against Russia do not target food. One G-20 member expressed the view that the war in the Ukraine and sanctions have impacted the global economy,” the summary said. “One G-20 member expressed the view that the sanctions are the main cause of the negative impacts on the global economy.” Another source of tension was around fossil fuels and climate change, following Saudi Arabia’s recent decision to cut oil production along with its OPEC+ partners. Those differences were highlighted in the summary. “Many members noted the importance of continued action on long-term structural challenges such as climate change, while one member cautioned against the premature halt of investment in fossil fuels and called for balanced and just transitions policies in response to climate change,” according to the statement.Without explicitly citing the strong dollar or calling on the Federal Reserve to reconsider the interest-rate hikes that have sent the greenback surging this year, the statement referred to the struggles many countries are facing as a result of their own weaker currencies, along with higher inflation and an increasing debt burden. The summary allowed for “temporary and targeted measures to help sustain the purchasing power of the most vulnerable and cushion the impact of commodity price increases,” as long as those policies are “well designed.” G-20 central banks “will continue to appropriately calibrate the pace of monetary policy tightening in a data-dependent and clearly communicated manner, ensuring that inflation expectations remain well anchored, while being mindful to safeguard the recovery and limit cross-country spillovers,” according to the statement. “Recognizing that many currencies have moved significantly this year with increased volatility, we reaffirm our April 2021 exchange rate commitments,” the summary said. That refers to a prior pledge to “refrain from competitive devaluations” and not “target our exchange rates for competitive purposes.” The summary noted that “a number of members emphasized the need to address debt vulnerabilities.” Countries reiterated their commitment to step up efforts to implement “in a predictable, timely, orderly and coordinated manner” the so-called Common Framework that brings the Paris Club of traditional rich debtor countries together with China to try to restructure the debts of low-income countries on a case-by-case basis. The nations welcome progress by creditor committees so far and called for resolution for Chad and Zambia by early 2023, and encouraged the conclusion of the debt treatment for Ethiopia under an IMF-supported loan.
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