The debt crisis dominates the meeting of the big money of the G20

2023-07-18 03:11:03

Finance ministers and central bankers from the G20 began their discussions on Monday on debt restructuring agreements, multilateral banking reform and climate change financing, which aim to support a global economy in loss of speed.

Indian Finance Minister Nirmala Sitharaman, who is chairing and hosting the meeting in Gandhinagar, western Gujarat state, opened the proceedings by reminding financial leaders that they had “a responsibility to steer the economy world towards strong, sustainable, balanced and inclusive growth”.

One of the key items on the agenda over the two days will be to “facilitate consensus on intractable issues related to rising indebtedness,” said Ms.^me Sitharaman earlier Monday, speaking to the press alongside Janet Yellen, U.S. Treasury Secretary.

Discussions will also focus on “crucial global issues such as strengthening multilateral development banks and adopting coordinated climate action”, added Ms.^me Sitharaman.

M^me Yellen also spoke about efforts to tackle the over-indebtedness of the world’s poorest countries, noting progress on debt restructuring in Zambia, which she discussed during her visit to Beijing this month.

China slows down on over-indebtedness

China, the world’s second-largest economy and the biggest financial backer to several struggling, low-income Asian and African countries, has so far resisted adopting a common multilateral position on the issue, officials said.

On the sidelines of the G20 talks on Sunday, Janet Yellen stressed that the agreement with Zambia had taken “too long to negotiate” and added that she hoped that the treatment of those from Ghana and Sri Lanka could be “finished quickly”.

“We should apply the common principles we adopted in the Zambia case to other cases, rather than starting from scratch each time,” said Mr.^me Yellen.

According to a senior official from India, which chairs the G20, Beijing did not react in a very encouraging way on the question of the common debt.

Several struggling economies after the twin shocks of the COVID-19 pandemic and Russia’s war in Ukraine (which affects global fuel and commodity prices) are “reaching a breaking point”, the official added. .

Beijing is a major creditor in some of these cases and has been criticized for its stance on debt restructuring for these countries.

The cost of climate change

The G20 will also discuss the reform of multilateral development banks, the regulation of cryptocurrencies and the need to facilitate the access of the poorest countries to financing intended for the mitigation of the effects of climate change and adaptation to climate change. these.

“In the countries of the North, climate change is synonymous with reducing emissions” of CO₂said Ajay Banga, the new president of the World Bank, in a column published this week in the run-up to the meeting.

“But in the Global South, it’s a matter of survival,” he continued, “because hurricanes are more violent, heat-tolerant seeds are scarce, drought destroys farms and towns, and floods wash away decades of progress. »

The first stage of an agreement on a fairer distribution of tax revenues from multinational companies, reached last week by 138 countries, should also be implemented.

Multinationals, especially technology companies, are currently able to easily shift their profits to low-tax countries, even if they do only a small part of their business there.

However, developed G7 members fear the focus on the Russian invasion will derail the final deal, although Janet Yellen on Sunday said she “rejects the idea of a barter” between aid to Ukraine and that dedicated to developing countries.

On Sunday, Japanese Finance Minister Shunichi Suzuki “reconfirmed the G7’s unwavering support” for Ukraine, adding that Moscow will also have to “pay the long-term reconstruction costs”.

Any discussion of support for Ukraine is somewhat uncomfortable for G20 host India, which has so far not condemned the Russian invasion, despite being a member of the Quad alliance alongside Australia, the United States and Japan.