G20 finance chiefs meet as Indonesia warns of energy and food disaster

A group of 20 finance ministers and central bank governors from leading economies met in Indonesia on Friday for talks on the fallout from Russia’s invasion of Ukraine, with the host warning them that failure to deal with energy and food crises would be catastrophic.

The two-day meeting on the resort island of Bali began in the shadow of a war that has roiled markets, pushed up food prices and fueled breakneck inflation, a week after Moscow’s top diplomat ended talks with the forum’s foreign ministers.

In her opening remarks, Indonesian Finance Minister Sri Mulyani Indrawati urged ministers to work together in a spirit of “cooperation, collaboration and consensus” because “the world is looking for solutions.”

“The cost of our failure is more than we can afford,” she told delegates. “The humanitarian consequences for the world and for many low-income countries would be catastrophic.”

Global finance leaders, including US Treasury Secretary Janet Yellen, will discuss the recovery from the coronavirus pandemic. But the fallout from the Ukraine war – weighing on an already brittle global recovery – will be high on the agenda.

A day before the meeting, Yellen set the tone, calling Russia’s war in Ukraine the “biggest challenge” to the world economy and saying members of Putin’s government had “no place” at the talks.

“We are seeing negative spillovers from this war in all parts of the world, particularly in relation to higher energy prices and increasing food insecurity,” she said.

Yellen is expected to urge G20 allies to put a price cap on Russian oil to choke off President Vladimir Putin’s war chest and pressure Moscow to end its invasion while cutting energy costs.

Both Russian Finance Minister Anton Siluanov and Ukraine Finance Minister Serhiy Marchenko will attend the meeting virtually.

Yellen led a multinational strike by finance officials in April as Russian delegates spoke at a G20 meeting in Washington. No communiqué was issued at the end of this meeting.

It’s unclear if a similar strike will take place at that meeting after no foreign minister left last week, but Yellen would not be involved if they repeated their joint action.

It is also unlikely that there will be a final communiqué after talks conclude on Saturday due to disagreements with Russia.

G20 leader Indonesia – which pursues a neutral foreign policy – has refrained from inviting Russia, despite Western pressure.

The finance ministers of Italy and Canada are in attendance, but Chinese Finance Minister Liu Kun and Britain’s new Finance Minister Nadhim Zahawi are only attending virtually.

International Monetary Fund chief Kristalina Georgieva will appear in person after saying on Wednesday the global economic outlook had “deteriorated significantly” because of the Moscow invasion.

European Central Bank President Christine Lagarde is attending virtually, but World Bank Chief Executive David Malpass will not be attending.

The meeting is a prelude to the leaders’ summit on the Indonesian island in November, which was set to focus on the global recovery from the Covid-19 pandemic.

Other issues to be addressed by ministers include digital financial inclusion – with more than a billion people around the world still without access to a bank account – and the deadline for an overhaul of international tax rules.

The Organization for Economic Co-operation and Development (OECD) will provide ministers with an update on progress on international tax changes that will set a global minimum corporate tax rate of 15 percent by 2024, a year later than originally planned.

The deadline for the passage of legislation to underpin the new rules has been set for mid-2023, according to the OECD.