JAKARTA/WASHINGTON: A contentious meeting of Group of 20 finance leaders ended with Russia and China watering down communique language on geopolitical risks to the global economy, deleting a reference to “current” tensions in a final statement as markets fretted over the prospect of war in Ukraine.
The meeting hosted by Indonesia was one of the most fractious since the start of the COVID-19 pandemic in 2020, according to people familiar with the discussions. They also described protracted disagreements over language on debt restructuring for poor countries, carbon pricing and other issues.
As the meeting concluded, U.S. and European stocks fell on worries that a Russian invasion of Ukraine was imminent after Russian-backed separatists announced a surprise evacuation of their breakaway regions in eastern Ukraine to Russia amid stepped up shelling.
Instead of a reference to “current” tensions threatening the global outlook in an earlier draft seen by Reuters, the communique said: “We will also continue to monitor major global risks, including from geopolitical tensions that are arising, and macroeconomic and financial vulnerabilities.”
People familiar with the discussions said that both Russia and China had objected to the language on tensions.
That vaguer language contrasts sharply with a warning by finance ministers of the G7 group of large western economies on Monday that Russia would face “massive” economic consequences if it chose to invade Ukraine. Neither Russia nor China are members of the G7.
DEBT RELIEF STANDSTILL
The G20 talks, held virtually and in the Indonesian capital Jakarta, were also marked by disagreements over the group’s stalled debt restructuring framework.
The final communique failed to endorse International Monetary Fund and World Bank proposals for an immediate debt service suspension for poor countries that seek restructurings and an expansion to include some middle-income countries.
Instead, finance officials reiterated their “commitment to step up our efforts” to implement the framework in a “timely, orderly and coordinated manner” without any specifics.
Earlier a source at the talks said China, by far the world’s largest bilateral creditor, had baulked at the idea of accepting outright haircuts on debt.
World Bank President David Malpass said at the Munich Security Conference after the finance meeting that he was concerned the G20 “is not identifying the steps forward” to deal with a massive and growing debt overhang in developing countries.
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