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G20 meeting in India split on debt relief and Ukraine

July 18, 2023

Finance ministers from the Group of 20 major economies met to discuss a raft of issues, including debt restructuring deals for low-income nations and the effect of Russia's grain deal pullout on developing economies.

People leave a room on a red carpet
Finance chiefs agreed more needs to be done to address global inequality Image: Ajit Solanki/AP/picture alliance

A two-day meeting of finance ministers and central bankers from the Group of 20 leading economies ended Tuesday without a final communique due to differences over the war in Ukraine. 

Indian Finance Minister Nirmala Sitharaman told reporters that the host country, India, instead issued a chair statement "because we still don't have a common language on the Russia Ukraine war." 

According to the chair summary, China and Russia objected to language left over from the previous G20 declaration in Indonesia, saying the war has caused "immense human suffering" while "exacerbating existing fragilities in the global economy."

Nevertheless, Sitharaman said that "several" countries condemned Russia's pullout from the Black Sea grain deal on Monday. 

Russia's decision sparked outrage from the United Nations, which has warned millions of the world's poorest would "pay the price."    

"We are living in complicated times; I have to allude to the fact that Russia yesterday withdrew from the Black Sea-Ukraine initiative — and we are here discussing how to help the vulnerable countries," German central bank chief Joachim Nagel said.  

Debt relief in focus 

During its G20 presidency this year, India has appealed for consensus on issues affecting developing countries, such as debt. 

A report published by an independent panel for the G20 on Tuesday said multilateral development banks (MDB) must create a new funding mechanism and triple sustainable lending by 2030 to eliminate poverty and achieve climate goals.    

"Individually and collectively, MDBs must become effective agents in all developing countries for integrating the development and climate change agendas," the report tablet during the meeting read.     

China, a major lender to several low-income countries in Asia and Africa, has so far resisted any one-size-fits-all debt restructuring formula.

IMF chief Kristalina Georgieva said the debt restructuring process "still needs to be speedier and more effective," adding that the costs of delay are being carried by countries "least able to bear this burden."

The 'growing divide between rich and poor'

World Bank president Ajay Banga said on Tuesday that the growing divide between the rich and poor nations is deepening the risk of poverty in the developing world, adding that he fears a lack of progress was in danger of splitting the global economy.   

World Bank President Ajay Banga at G20 meeting in India
Ajay Banga said the debt is the single biggest challenge.Image: Amit Dave/REUTERS

"The thing that keeps me up at night is a mistrust that is quietly pulling the Global North and South apart at a time when we need to be uniting," Banga said.   

"The Global South's frustration is understandable. In many ways they are paying the price for our prosperity," he added.    

Banga added that developing nations had the highest percentage of young people, but many lack access to education and  employment.     

"If they don't ... that is not a demographic dividend, that is a challenge to countries," he said.    

The World Bank said it is working to increase its financial capability - but stressed that the future economic expansion cannot come at the cost of the environment.     

"The simple truth is: We cannot endure another period of emission-intensive growth," Banga said.   

ara/wmr(AFP, Reuters)