G-7 Finance Chiefs Unite to Condemn Russia and Counter China

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(Bloomberg) — With mounting risks to the global economy, finance chiefs from the world’s richest nations have presented a united front with more support for Ukraine, a plan to diversify supply chains and a pledge to close loopholes in financial regulation.

The ease of the G7 to agree on a statement after three days of talks in Niigata, Japan was in stark contrast to the discord seen at a meeting of G20 finance ministers and central bank governors in Bengaluru, India, less than three months earlier. , which ended without the usual official statement.

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The difference: neither China nor Russia. While condemnation of Russia’s “war of aggression” against Ukraine was front and center in the 14-page statement, China did not get any direct mention. However, there were thinly veiled plans to counter its dominance of global supply chains and growing influence over the Global South.

US Treasury Secretary Janet Yellen could not escape the debt-ceiling dilemma. In an interview with Bloomberg Television, she said the federal government would have to back off some payments if Congress did not raise the debt limit.

Here is a look at what emerged from three days of talks:

Ukraine aid

Aid to Ukraine through early 2024 has been pushed to $44 billion in a move that enabled the International Monetary Fund to approve $15.6 billion in support over four years. “We call for an immediate end to Russia’s illegal war against Ukraine, which would remove one of the biggest uncertainties about the global economic outlook,” the financial officials said in the statement.

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macro forecast

The leaders noted the need to remain “flexible and resilient” in economic policy amid growing uncertainty about the global economy. The statement added that central banks “will ensure that inflation expectations remain well anchored and communicate policy positions clearly to help limit negative spillovers across the country.”

financial stability

The need to ensure global financial stability has been a prominent theme in the aftermath of the collapse of Silicon Valley Bank and First Republic Bank, and the Credit Suisse takeover. While the G7 maintained its stance that the global financial system remains “resilient” in the statement, officials also sounded the alarm against inaction.

supply chains

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Trade turmoil was also high on the list of concerns at the meeting, with China implicitly concerned. The finance chiefs have proposed a new partnership that will be open to other countries and will target clean energy, as previously reported by Bloomberg News. The statement showed that they aim to launch the Partnership for Reinforcing Resilient and Inclusive Supply Chain, or RISE, by the end of this year at the latest.

religion

To build consensus outside the G7, finance chiefs have made sure to get other countries into the conversation, with a session dedicated to pledging more support to low- and middle-income countries and helping them secure resources from IMF facilities. The statement stated that Zambia, Ethiopia and Ghana are countries that have achieved or are expected to witness some progress recently within the framework of the so-called joint framework of the Group of Twenty.

other obligations

Chiefs of Finance also reaffirmed commitments to climate change mitigation and adaptation, strengthening governance and financing for the global health architecture, and continuing work toward the deployment of crypto regulations, without making any significant new progress on those fronts.

Attention now turns to the G7 leaders’ meeting in Hiroshima on May 19-21.

– With assistance from Alessandra Miliccio, Christopher Condon, Kamil Kowalsch, Joe Mayes, Amy Urabe, Toru Fujioka, and Erika Yokoyama.