BackG20 eyeing fallout from Ukraine, pushes US on IMF reforms
G20 says will work with IMF on options on how to advance reforms if US does not move forward by year-end
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Washington: The world’s top economies are monitoring the economic situation in Ukraine for any fallout that may pose risks to economic and financial stability, the Group of 20 (G20) finance ministers and central bankers said on Friday in a final communique.
G20 officials also kept up the pressure on the US, which has held up International Monetary Fund (IMF) reforms agreed in 2010 that would double the Fund’s resources and give more say to emerging markets. The G20 said it was “deeply disappointed" in the delays and will work with the IMF on options on how to advance the reforms if the US did not move forward by year-end.
While the final communique was less specific on some key points than the one the G20 issued in February, including on the spillover effects of monetary policies in advanced nations, a G20 source downplayed those changes as stylistic and not substantive.
Addressing the crisis in Ukraine, the G20 said the IMF and the World Bank remain best-placed to help countries deal with their economic challenges “through policy advice and catalytic financing".
“We are monitoring the economic situation in Ukraine, mindful of any risk to economic and financial stability, and welcome the IMF’s recent engagement with Ukraine as the authorities work to undertake meaningful reforms," the G20 said during the IMF-World Bank spring meetings in Washington.
“The situation in Ukraine highlights the important role of the IMF as the world’s first responder to financial crises."
Ukraine’s economy was thrown into chaos after popular protests in Kiev ousted pro-Russian president Viktor Yanukovich in February, and Russia seized Ukraine’s Crimea and annexed it, causing the worst standoff between Moscow and the West since the Cold War.
Russia, a G20 member, was not specifically mentioned in the communique.
Earlier on Friday, German finance minister Wolfgang Schaeuble said he and other top finance officials from the Group of Seven developed nations (G7) had agreed to work together to solve the Ukraine crisis, and that Russia must be a part of the solution.
“We were all agreed that we must solve this problem together," he told reporters. Russia must be part of the solution and “we don’t want to make this difficult for Russia," he added.
Speaking before the meeting ended, the G20 source said economic sanctions on Russia had not been discussed. The country has already been hit with US and European Union sanctions.
Last month, Ukraine won a $14 billion-$18 billion standby credit from the IMF. On Friday, the head of the Fund’s European department said it is able to lend to Ukraine because the country’s debt is sustainable.
The long-delayed IMF reforms would amplify the voices of emerging-market countries such as the BRICS—Brazil, Russia, India, China and South Africa.
In the communique, the G20 said it is “deeply disappointed with the continued delay in progressing the IMF quota and governance reforms".
If the reforms are not ratified by year-end, the G20 said, “We will call on the IMF to build on its existing work and develop options for next steps and will work with the (IMF’s policy committee) to schedule a discussion of these options."
The source said Brazil had pushed for a harder line on how the G20 should respond to the delays in IMF reform.
Earlier on Friday, Russia’s finance minister said developing nations may demand changes to the IMF’s emergency borrowing mechanism if the United States does not approve the 2010 governance overhaul for the global lender.
In the section of the communique that appeared to address the effects that policies by US Federal Reserve and other major central banks have on the rest of the world, the G20 pledged to provide “clear and timely communication" of its actions, with an eye on the global fallout as policies are “recalibrated".
It did not specifically name monetary policy, and dropped a reference from the G20’s February communique that stressed central banks should be careful in withdrawing stimulus. Reuters
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