G-20 Latest: India Says G-20 at Odds Over War, Debt

Indian Finance Minister Nirmala Sitharaman said that Group of 20 members continue to be split over Russia’s invasion of Ukraine and have no deal as yet on the principles of future debt-relief deals.

(Bloomberg) — Indian Finance Minister Nirmala Sitharaman said that Group of 20 members continue to be split over Russia’s invasion of Ukraine and have no deal as yet on the principles of future debt-relief deals.

Still, the host of two days of G-20 meetings of finance ministers and central bank governors hailed the enthusiasm and energy in talks held in Gandhinagar, India. Debate on debt sustainability was “intense” she said.

As in the group’s February meeting, a “chair summary” and “outcome document” was end result, in lieu of the joint communiques that were de rigeur prior to the Ukraine war. 

Key Developments 

  • Godongwana Rebuffs ANC Call to Pressure S. African Central Bank
  • China’s Slowdown Is ‘Concerning’ for Australia, Treasurer Says
  • ECB’s Visco Says Inflation May Drop More Quickly Than Forecast
  • Yellen Says China Slowdown Risks Spillovers But No US Recession
  • ECB’s Nagel Sees Hike in July But Data to Decide September

(All times local)

Ueda Says BOJ to Keep Easing Unless View Shifts on Price Goal (8:17 p.m.)

Bank of Japan Governor Kazuo Ueda indicated it would take a shift in the bank’s assessment for stably achieving its inflation target to change its stance for persistent monetary easing.

The BOJ has continued with monetary easing under yield-curve control with a “premise” that there is still distance to stably hitting its inflation target, Ueda said at a press conference Tuesday. 

India Says G-20 Still at Odds Over War, Debt Relief Issues (6:39 p.m.)

G-20 finance officials “still don’t have a common language on the Russia-Ukraine war,” Indian Finance Minister Nirmala Sitharaman told reporters in Gandhinagar. Any change in language on the Ukraine war needs to be handled by G-20 leaders, she said

Several members condemned Russia’s decision to exit the Black Sea grain deal, she said. Discussions continue on whether multilateral development banks should take haircuts in debt restructuring, she also said.

China Tells G-20 It Seeks Fair Burden Sharing in Debt Talks (5:24 p.m.)

Chinese Minister of Finance Liu Kun told the G-20 finance chiefs in India that the group should push multinational creditors of stressed developing nations to participate in debt relief efforts with the principle of joint action and fair burden, according to a Chinese government statement.

China seeks “effective, systemic and overall” resolution of the debt issue, Liu said at the meeting. 

IMF Says China Willing to Absorb Some Pain in Debt Relief Talks (3:30 p.m.)

China, the largest official creditor for poorer countries, has shown more openness in the debt relief talks and is willing to absorb some pain, IMF Managing Director Kristalina Georgieva said. 

The G-20 members have been deadlocked on debt relief for developing nations, after conceiving a coordinated plan known as the Common Framework in 2020.  Beijing in the past has urged multilateral lenders such as the World bank to participate in taking haircuts.

Georgieva said the IMF wants to see faster movement in debt resolution for Ghana, Chad and other countries, saying creditors want treatment to be fair.

For her part, Treasury Secretary Janet Yellen said: “We have made some progress with the Chinese.” Speaking in an interview on the sidelines of the meetings Tuesday, she said “they did go along with Zambia, and they were more cooperative in the case of Ghana and Sri Lanka.”

Still, “I understand the Chinese have been quite difficult about the communique in the area of debt relief,” Yellen said.

Godongwana Rebuffs ANC Call to Pressure South African Central Bank (1 p.m.)

South Africa’s finance minister rebuffed a call by some in the nation’s governing party for him to push the central bank to use measures other than lifting borrowing costs to curb inflation, as he reaffirmed the bank’s independence.|

“I’m not in discussion with the central bank on that matter,” Godongwana said Tuesday in an interview with Bloomberg Television at a meeting of Group of 20 finance chiefs in Gandhinagar, India. “The central bank in South Africa, by constitution, is independent and its purpose is defined as that of protecting the value of the currency in the interests of balanced growth.”

ECB’s Visco Says Inflation May Drop More Quickly Than Forecast (10 a.m.)

European Central Bank Governing Council member Ignazio Visco said inflation may come down more quickly than the institution projected last month as falling energy costs continue to affect a broader range of prices. 

While inflation measures that strip out volatile items are “stubborn,” lower prices for commodities including natural gas are expected to have a growing impact, Visco told Bloomberg Television on Tuesday. 

China’s Slowdown Is ‘Concerning’ for Australia, Treasurer Says

China’s flagging economic growth is “concerning” for Australia, Treasurer Jim Chalmers said, adding that it’s “quite remarkable” Beijing is grappling with the risk of deflation at a time when most nations are trying to restrain prices.

“It has a substantial impact on how we see prospects for the global economy,” Chalmers said. “China is obviously a big piece of the puzzle for us and so when the data out of China is a bit softer, that is concerning to us.”

World Bank Chief Aims to Boost Lending Capacity, Keep AAA (9 a.m.)

World Bank President Ajay Banga said his bank is aiming to ramp up its lending capacity while maintaining a top, AAA credit rating.

“We are building a better bank, but eventually we will need a bigger bank,” Banga said in prepared remarks to the G-20 finance chiefs on Tuesday. “I am proud to announce the progress we have already made to stretch every dollar, while preserving our AAA credit rating.”

The lender unveiled three new mechanisms which it said would boost its lending capacity. One is a proposed “portfolio guarantee program” where shareholders of the World Bank will step in if countries cannot repay their loans. The bank said in a statement that $5 billion in guarantees could generate $30 billion in lending over 10 years.

The second step is “raising hybrid capital from shareholders and other development partners.” This will give “shareholders and partners an opportunity to invest in bonds with special leveraging potential,” the bank said. Just $1 billion could increase the World Bank’s lending capacity by $6 billion over a decade, it said.

The third mechanism is “extracting more value from callable capital.” This is “a commitment from our shareholders to step in with new funds” in extreme circumstances, the bank said. 

Advisory Panel Says $3 trillion a Year Needed for Development (9 a.m.)

To meet the needs of poverty reduction, climate-change mitigation and sustainable infrastructure development, some $3 trillion of financing per year will be needed by 2030, according to an advisory paper requested by the G-20.

“The window for action is closing fast,” a panel of economists headed by former US Treasury Secretary Lawrence Summers and NK Singh wrote in their presentation to the G-20. “The choices made now will determine prospects for growth, sustainability and inclusion for decades to come.”

It is important that multilateral development lenders leverage their balance sheets and mobilize private-sector capital, the report said. Sustainable development goals are “badly off-track” and there is an intense urgency to address problems of climate change, the panel said.

“The international development finance system should be designed to support this spending by providing $500 billion in additional external financing by 2030,” the panel said. One third of that should be in so-called concessional financing, which is ultra-low interest lending, while two-thirds should be non-concessional official funding, the group said.

(Corrects figure in World Bank item to $5 billion.)

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