Debt crisis dominates G-20 finance ministers' meetings

Finance ministers and central bank governors from the G20 countries began discussions on debt restructuring, reforming multilateral banks, and climate finance in an effort to support the struggling global economy.

Indian Finance Minister Nirmala Sitharaman, who chaired and hosted the meeting in Gandhinagar, Gujarat (west India), opened the discussions by reminding the finance ministers of their responsibility to "steer the global economy towards strong, sustainable, balanced, and inclusive growth."

Earlier on Monday, Sitharaman, alongside US Treasury Secretary Janet Yellen, told reporters that one of the key agenda items over the two-day meeting would be "facilitating consensus on thorny issues related to high debt."

Sitharaman also stated that the discussions would focus on "critical global issues such as supporting multilateral development banks and adopting coordinated climate measures."

Yellen, on her part, discussed efforts to address the debt problem in some of the world's poorest countries, noting progress in debt restructuring for Zambia, which she discussed during her earlier visit to Beijing this month.

However, China, the world's second-largest economy and a major financial supporter of many struggling low-income Asian and African countries, has so far resisted adopting a multilateral position on this issue, according to officials.

On the sidelines of the G20 talks on Sunday, Yellen mentioned that the deal with Zambia "required lengthy negotiations," adding that she hopes the resolution of Ghana's and Sri Lanka's debt issues will be "completed quickly."

Yellen stated, "We should apply the common principles we adopted in the case of Zambia to other issues, rather than starting from scratch each time."

According to a senior official from India, which chairs the G20, Beijing has not been very encouraging in terms of the joint debt issue.

The official added that many struggling economies have "reached a breaking point" following the dual shock of the COVID pandemic and the consequences of the Russian war in Ukraine, which affects global fuel and commodity prices.

China is a major creditor in some of these cases and has faced criticism for its stance on debt restructuring.

The G20 will also discuss the reform of multilateral development banks, regulation of cryptocurrencies, and the need to facilitate access to finance aimed at mitigating and adapting to the impact of climate change.

The new President of the World Bank, Aga Khan, expressed his concern last week about the "deep lack of trust" between the Global North and South, stating that "we must come together" to tackle interconnected challenges from combating global poverty to the "existential" climate crisis and economic recovery post-pandemic, which is threatened by inflation and the war in Ukraine.

He further mentioned in an online article that "the frustration felt by countries in the Global South is understandable. In many ways, these countries pay the price for the prosperity of others," noting that these countries "are deeply worried that the means promised to them will be redirected towards rebuilding Ukraine."

Finance ministers from the G7 advanced economies are concerned that the focus on the Russian invasion may hinder a final agreement. Yellen sought to allay concerns on Sunday that the massive support for Ukraine would come at the expense of aid to developing countries. She stated during a press conference in Gandhinagar, "I reject the idea of a tradeoff" between these two matters, which are closely linked.

On Sunday, Japanese Finance Minister Shunichi Suzuki reaffirmed the "steadfast support" of the G7 for Ukraine, adding that Moscow would also have to "bear the costs of long-term reconstruction."

Any discussion of support for Ukraine is somewhat uncomfortable for India, which hosts the G20 and has not yet expressed condemnation of the Russian invasion, despite being a member of the Quadrilateral Security Dialogue (Quad) along with Australia, the United States, and Japan.



AFP