Doubling support for war-hit Ukraine is the “best” way to help the global economy, alongside stimulating emerging markets and dealing with the debt crisis, US Treasury Secretary Janet Yellen said on Sunday.
Yellen also said on the sidelines of a G20 finance ministers’ summit in India that she would “reject” criticism that there was a compromise between aid to Ukraine and developing countries.
“Ending this war is a moral imperative first and foremost,” she told reporters in Gandhinagar, where a major G20 summit is taking place. “But it’s also the best we can do for the global economy.”
Yellen also cited efforts to tackle the debt crisis in ailing economies, banking reform and a global tax deal, warning that it was “premature” to talk about lifting tariffs on China.
Russia’s invasion of Ukraine, both global breadbaskets that together exported nearly a quarter of the world’s wheat supply, sent shockwaves through global economies and sent food and fuel prices skyrocketing.
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At a summit in Lithuania on Wednesday, the leaders of the G7 promised to support Ukraine until it can repel the Russian invasion.
Any discussion of Ukraine is uncomfortable for G20 host India, which has not condemned the invasion of Russia but is also part of the Quad group alongside Australia, the United States and Japan.
Yellen also referred to progress on Zambia’s debt restructuring, which she discussed with Chinese officials during a visit to Beijing last week, and said she expected debt treatment for Ghana and Sri Lanka to be completed soon.
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She said it was too early to lift restrictions imposed on China during a trade war started by former US President Donald Trump.
“The tariffs were put in place because we had concerns about unfair trade practices on the part of China, and our concerns about those practices remain, they really haven’t been addressed,” Yellen said.
“Perhaps this is an area where we could make progress over time, but I would say it is premature to use this area as a de-escalation zone.”
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Yellen pointed to other work on tackling the debt crisis and reforming multilateral development banks, including the World Bank and other regional lenders, which she says could free up $200 billion over the next decade.
More than half of all low-income countries are on the verge of or in a debt crisis, twice the number in 2015, she said.
G20 finance chiefs and central bank governors are due to meet on Monday and Tuesday, and World Bank chief Ajay Banga warned of a “deep distrust…silently pulling the global North and South apart at a time when we must unite.”
The climate crisis, post-pandemic recovery efforts, the war in Ukraine and lack of progress in the fight against poverty created divisions, Banga said.
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“The frustration of the Global South is understandable,” Banga said in an editorial.
“In many ways, they are paying the price for the prosperity of others. If they rise, they fear promised resources to rebuild Ukraine will be diverted; they feel that their goals are being constrained because energy regulations are not universal, and…” They fear that a rising generation will be locked in a prison of poverty.”
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The International Monetary Fund said it was crucial to find concerted efforts to deal with the ailing global economy.
“The world will seek collective action to counter increasing economic fragmentation, slowing growth and high inflation,” the IMF said in a statement last week.
The G20 will also discuss cryptocurrency regulations and make it easier for developing countries to access finance to mitigate and adapt to the effects of climate change.
“In the Global North, climate change means emission reductions,” Banga said.
“But survival is at stake in the Global South, as hurricanes are stronger, heat-resistant seeds are in short supply, drought destroys farms and cities, and flooding erases decades of progress.”
A newly agreed first step towards a fairer distribution of tax revenue from multinational companies, which 138 countries reached on Wednesday, is also set to be implemented as part of the G20 talks.
Multinational companies, especially technology companies, can currently easily shift their profits to countries with low tax rates, even though they conduct only a small part of their activities there.
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