G-20 finance chiefs vow to watch geopolitical risks, act on inflation

Finance chiefs from the Group of 20 advanced and emerging economies agreed Friday to keep tabs on geopolitical risks amid growing concern over a possible Russian invasion into Ukraine, while pledging to take necessary actions to tame inflation pressures as oil and food prices rise.

In a communique issued after their two-day meeting held in Jakarta in a hybrid in-person and virtual format, the G-20 members said they will “continue to monitor major global risks, including from geopolitical tensions that are arising, and macroeconomic and financial vulnerabilities,” without directly mentioning the Ukraine crisis.

The communique was adopted late Friday night after a delay apparently due to disagreements over the wording to describe geopolitical risks in reference to the Ukraine situation.

Concerns are growing over the likelihood of a Russian invasion into the Eastern European country amid a massive buildup of Russian troops on the Ukrainian border.

“To formulate the words (in the communique), it took time, because at the same time, in the meeting room, there were some countries which are involved in the geopolitical tension,” Indonesian Finance Minister Sri Mulyani Indrawati told a press conference after the meeting. Russia is among the G-20 members.

While the participants “didn’t discuss” the Ukraine issue, the minister sought efforts to “manage” geopolitical risks to prevent them from undermining the economic recovery.

The G-20 decision not to mention the Ukraine issue is a stark contrast to a recent statement issued by the G-7 finance ministers warning Russia of economic sanctions that would have “massive and immediate” consequences if it invades Ukraine.

While Moscow has said it has no intention of invading Ukraine and that it withdrew part of its troops, the United States has dismissed such a claim. On Thursday, U.S. President Joe Biden said he sees a “very high” risk of a Russian invasion within the “next several days.”

In the communique, the G-20 members pledged to use “all available policy tools to address the impacts of the pandemic,” amid worries the spread of the highly transmissible Omicron variant of the coronavirus could cloud the global economic outlook.

The G-20 members said they are committed to implementing well-calibrated exit policies as the economies recover from the coronavirus pandemic.

“Central banks will act where necessary to ensure price stability in line with their respective mandates, while remaining committed to clear communication of their policy stances,” the G-20 ministers said.

They also agreed to step up their efforts on debt restructuring assistance schemes for low-income and vulnerable countries to strengthen their financial resilience.

Bank Indonesia Governor Perry Warjiyo told reporters that it is “very important that the global economic recovery can return to long-term economic growth, including overcoming the scarring effect of the pandemic.”

The spread of the Omicron variant has continued to raise concerns over the threat to the global economy, already reeling from pandemic-caused supply disruptions.

According to the International Monetary Fund, the global economy is projected to grow 4.4 percent this year, weaker than the 5.9 percent expansion estimated for 2021, with the United States and China — the world’s largest and second-largest economies, respectively — weighed on by supply disruptions linked to the pandemic and inflation.

Amid rising inflation, the U.S. Federal Reserve has signaled an interest rate increase as early as March. A rate hike has been watched by financial markets and economies due to the possible impact on developing and emerging economies.

Masato Kanda, Japanese vice finance minister for international affairs, attended the Jakarta meeting on behalf of Finance Minister Shunichi Suzuki, while Bank of Japan Governor Haruhiko Kuroda participated online.

The G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.