The Ukrainian war and the food and energy crises are on the agenda of G20 financial officials
Friday – 16 Dhu al-Hijjah 1443 AH – 15 July 2022 AD
G20 participants listen to Indonesian Finance Minister Sri Mulyani (AP)
Nusa Dua (Indonesia): «Middle East online»
Top financial officials of the Group of Twenty started a meeting in Indonesia dominated by the effects of the Ukraine war on the world economy at a time when inflation is rising and growth prospects are weakening, and amid warnings from the host country that the Assembly’s failure to reach consensus could be disastrous for low-income countries as rising Food and energy prices are exacerbated by the war in Ukraine. Officials will look for solutions to mitigate the impact of inflation and the food and energy crises on the most fragile countries. Financial inclusion and global tax reform will also be discussed. The Organization for Economic Co-operation and Development will present a progress report on the reform of the global tax system with a minimum tax of at least 15 percent on the profits of multinational corporations. The application of such a global tax has been postponed until 2024, after it was originally scheduled to start in mid-2023.
At the beginning of the meeting, Indonesian Finance Minister Sri Mulyani Indrawati said Indonesia would be an honest broker and find innovative solutions to overcome the “triple threat” of high commodity prices, global inflation and war. She said the world was facing a looming global hunger crisis due to war, export restrictions and the continuing effects of the pandemic. She added that the risk of a crisis in the fertilizer stock could exacerbate the food crisis until 2023 and beyond.
“The world is watching us,” Indrawati said in her opening speech, adding: “The measures we will take will have a very important impact on all countries of the world.” Indrawati called for a joint forum involving the finance and agriculture ministries of the G20 countries to come up with concrete measures to tackle the growing food insecurity and the looming fertilizer supply crisis.
Similar joint meetings of the Ministries of Finance and Health were arranged for the group last year to address issues such as the unequal distribution of vaccines (Covid-19).
The two-day meeting of finance ministers and central bank executives is being held on the Indonesian island of Bali, a week after a meeting of the group’s foreign ministers, during which they launched a barrage of accusations against the Russian minister. foreign affairs, Sergei Lavrov, made about the war in Ukraine. Discussions should initially focus on how best to encourage a return to growth after the coronavirus pandemic, but the impact of the war in Ukraine and the food and energy crises is now high on the agenda.
“We are well aware that the price of our failure to agree is greater than we can bear,” the Indonesian minister warned, adding that “the humanitarian consequences for many low-income countries will be catastrophic.” On the eve of the meeting, US Treasury Secretary Janet Yellen considered the “biggest challenge” to the world economy stemming from the war in Ukraine, stressing that “representatives of (Russian President Vladimir) Putin’s regime have no place in this forum should not have. ” “We are seeing the repercussions of this war around the world, especially with regard to energy prices and growing food insecurity,” she added.
At the same meeting, Yellen called for increased spending to address current food security challenges. Yellen said poor families in the poorest countries are most directly affected, undermining development and eradicating poverty. She added that Russian President Vladimir Putin “uses food as a weapon of war.” She referred to the “destruction of agricultural facilities, the theft of grain and agricultural equipment, and the blockade of the Black Sea ports”. The war in Ukraine has raised the prices of grain, cooking oils, fuel and fertilizers. The naval blockade stopped exports, stranded dozens of ships in ports, stranding about 20 million tons of grain in Odessa silos. Moscow describes the invasion as a “special military operation”.
During the talks, Ngozi Okonjo-Iwela, director general of the World Trade Organization, said there were fears of diverting food supplies from poor countries and sending them to richer countries, “to reiterate what happened to Covid-19 vaccines.” “
The talks are expected to reflect a rift between Westerners seeking to economically isolate Moscow and large developing countries opposed to sanctions imposed on Russia. Russian Finance Minister Anton Siluanov is scheduled to virtually attend the meeting, while his Ukrainian counterpart, Sergei Marchenko, has been invited to speak online. Indonesia, host of the Group of Twenty this year, wanted to remain neutral and not succumb to Western pressure to keep Russia out of the meetings.
Yellen was involved in the boycott of a G20 summit in April when Russian officials spoke in Washington. The meeting ended without a closing statement.
Issuing a final statement is also not a certainty this time, given the possibility that there will be no consensus between countries on the causes of the current economic problems, and on Russia’s responsibility.
A source in the French Ministry of Finance said that this meeting was being held “in a very specific context”, adding: “This context creates risks for poor and emerging countries related to the normalization of monetary policy and the risks of a credit crunch. “
The meeting is attended by the finance ministers of Italy, Canada, India and South Africa, while many other countries have sent lower-level representatives. France is represented by the Director-General of the Treasury and the Governor of the French Bank. The president of the European Central Bank, Christine Lagarde, will participate at a distance, as will the Chinese and Brazilian finance ministers, while the president of the World Bank, David Malpass, will be absent.
The managing director of the International Monetary Fund, Kristalina Georgieva, is expected to attend the meeting in person, after warning on Wednesday of a “dark” global economic outlook.