Divided over Russia, G-20 aims at food security, debt crises

A flurry of central bank decisions this week, some unscheduled, have underscored officials’ need to keep their own domestic conditions at the forefront.
Indonesia's Foreign Minister Retno Marsudi, on screen, speaks during a meeting at the G20 Foreign Ministers' Meeting in Nusa Dua. Image: Dita Alangkara/Getty Images

Group of 20 finance chiefs started official meetings in Bali Friday with an eye toward progress on food security and debt issues as tensions over Russia impeded prospects for a more sweeping agreement.

Host Indonesia is pushing for G-20 members to pledge more concrete action to respond to food insecurity, including by sharing data on commodity stockpiles, and for them to coordinate better on macroeconomic policies, according to a person familiar with the discussions.

Against the backdrop of increasingly desperate moves this week by officials to stamp out inflation in off-cycle adjustments and jumbo interest-rate increases, the finance ministers and central bank governors scrambled to find areas of cooperation amid a growing list of risks to global economic stability.

The G-20 discussions have been “very difficult but sometimes fruitful,” Sri Mulyani Indrawati, Indonesia’s finance minister, said in opening remarks for the Friday meetings. “Despite all our differing positions, we have been able to make tangible progress on some critical issues.”

Indrawati cited “an alarming increase in risks to food security” wrought by the war in Ukraine and its after-effects, on top of pandemic woes. “The war as well as the commodity-price increase could worsen the global inflation spike and increase further social instability.”

US Treasury Secretary Janet Yellen on Friday again laid the blame for commodity-price inflation and food security woes squarely with Russian officials, who she pinned for “horrific consequences” and an “ongoing human and economic toll.”

Calling on the international community to boost and accelerate aid to Ukraine, Yellen said the war made it even more important for officials to come together on global challenges including tighter financial conditions and slowing growth in major economies.

The message was underscored Friday by unexpectedly weak data from the world’s No. 2 economy. China expanded in the second quarter at the slowest pace since the start of 2020 when Covid initially befell Wuhan. While consumption showed signs of improvement amid the lifting of some mobility restrictions, a youth jobless rate surged to a fresh record of 19.3%.

Yellen was set to make a push especially for assistance to low-income countries on food security at an early afternoon seminar, according to a Treasury official. Later Friday, she’s scheduled to speak on the evolution of policy tools to address threats to global macroeconomic stability.

A flurry of central bank decisions this week, some unscheduled, have underscored officials’ need to keep their own domestic conditions at the forefront. At the same time, the G-20 meetings are increasingly stressing the dangers of ignoring instability in the more vulnerable pockets of the global economy, including countries that are teetering on the brink of sovereign default — or already there, like Sri Lanka.

Indonesia is seeking to make progress on the debt treatment of countries including Zambia, the person said. It also wants to include a mention of the Energy Transition Mechanism in the G-20’s written agreement. The ETM is a platform for developing economies to get funding to decommission coal plants from a variety of investors, including sovereign, multilateral and private, instead of seeking bilateral financing.

In her opening remarks, Indrawati pointed to “the triple threat of war, surging commodity prices and increased global inflation that can also increase and create a spillover to debt — not only for the low-income country but also middle-income countries or even advanced economies.”

Seventeen of the 20 finance ministers and 11 central bank governors were present for the meetings Friday, according to a press release from Indonesian officials. Russia was represented by its deputy finance minister, while Ukraine’s finance minister dialed in virtually. Despite tensions, there were no walk outs at morning sessions, a person familiar with the talks said.

© 2022 Bloomberg

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