Treasury Secretary says global economy is ‘in a better place,’ but ‘not out of the woods’
By Sibi Arasu
Associated Press
BENGALURU, India (AP) — The U.S. wants to see tougher and more effectively enforced sanctions against Russia and additional support for Ukraine, Treasury Secretary Janet Yellen said Thursday during meetings of the Group of 20 leading economies in the Indian technology hub of Bengaluru.
Speaking on the eve of the anniversary of Russia’s invasion of Ukraine, Yellen said sanctions against Moscow were working but more needed to be done to hobble the Russian war effort while supporting Ukraine.
“We are seeking to strengthen sanctions and make sure that we address violations of sanctions,” she said, noting that the Russians were seeking alternative ways to “backfill” parts and equipment to replace and repair weapons damaged in the war.
“We have deprived them of many channels they can obtain material that is critical for their defense efforts,” Yellen told reporters. “That is a particular focus we have in mind in respect to enforcement of existing sanctions and perhaps with respect to further sanctions.”
Yellen said the U.S. expects to provide another $10 billion in assistance to Ukraine on top of more than $46 billion already given. She commended allies for their direct aid and said the role of the International Monetary Fund in those efforts is “critical.”
“We very much want to see the IMF negotiate an agreement to lend to Ukraine,” she said, noting that the fund’s managing director, Kristalina Georgieva, hopes to work out a full program by the end of March.
Yellen said that work “could not come soon enough” as well as on extending the Black Sea Grain Initiative that allows shipments from Ukraine and other efforts to improve food security.
Given the “strong language” on the war included in the G-20’s final statement at summit meetings in Indonesia in November, Yellen said she believed a strong condemnation of the war and its impact on the world economy is achievable in Bengaluru, though the issue is still under discussion.
In Bali, G-20 leaders declared that most strongly condemned the war, warning the conflict is intensifying fragilities in the world’s economy. They finessed divisions among them given that the group includes Russia and also countries like China and India that have significant trade ties with Moscow and have stopped short of outright criticism of the war.
Overall, the G-20 is a forum focused on economic rather than security concerns. In Bengaluru, finance ministers, central bank governors and other leaders are due to discuss a range of issues, including climate finance, regulating digital currencies, global taxation efforts and other financial priorities.
Turning to such topics, Yellen said the global economy was “in a better place” than several months ago as inflation eases and supply disruptions ease but warned that “we’re not out of the woods yet.”
She spoke with reporters after meeting with India’s finance minister, Nirmala Sitharaman, whom she thanked for India’s help in trying to resolve debt crises, particularly for its neighbor, Sri Lanka. The Indian Ocean nation is embroiled in a humanitarian catastrophe, strapped by shortages of food, fuel and medicines, among many things.
Yellen urged China to work with other donor countries in addressing the problem.
Many countries face daunting debt “overhangs,” Yellen said, after costly efforts to cushion the worst effects of the COVID-19 pandemic. Such woes have deepened as countries’ import bills surged due to sustained higher prices for food, oil and fertilizers and weakening currencies.
Yellen visited Zambia in January, in part to discuss the African country’s $6 billion debt to China, its biggest creditor. Zambia became Africa’s first pandemic-era nation to default when it failed to make a $42.5 million bond payment in November 2020.
But a slew of other countries, from Laos and Afghanistan to Venezuela and Argentina, have seen their finances deteriorate in the past year. The IMF estimates that about 55% of all low-income countries are near or in debt distress.
At a press conference on the sidelines of the meeting, Japanese Finance Minister Shunichi Suzuki said the smaller Group of 7 democracies are advising multilateral banks to review their business models to better address poverty reduction and achieve sustainable development goals.
“We will continue to closely work with other G-20 members to address debt issues of vulnerable middle-income countries such as Sri Lanka,” he said.
China is one of Sri Lanka’s biggest creditors after extending it loans to build a port and other facilities. It has offered a two-year suspension of repayments but balked at reducing the amount owed. The IMF has set a reduction in debt as a condition for an emergency loan.
Suzuki said the G-7 is working to resolve debt issues for Ethiopia, Ghana and Zambia.
