Israel-Hamas war: Petrol, diesel price concerns back, says Finance Minister Nirmala Sitharaman

Israel-Hamas war Petrol prices: Finance Minister Nirmala Sitharaman on October 13 addressed concerns that the Israel-Hamas war would affect fuel prices. It is a concern also echoed by other emerging economies, Reuters reported.

Speaking at the G20 Presidency briefing in Morocco, where the 4th G20 Finance Ministers and central bank governors meeting took place, Sitharaman said the ongoing crisis in the middle-east has re-fuelled price concerns, as per reports.

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"With the recent crisis in the Middle-East, concerns on fuel are back again, the worries that many countries expressed. Concerns and uncertainties are about peace as a positive factor. Fuel concerns affecting food security aspects and impact on inflation, fragmentation of supply chains were the three major worries in the near future," she stated.

Impact on emerging markets in focus

The finance minister also noted that emerging markets are going to the growth drivers or "engine of growth" for the world, adding that it is these economies that are witnessing "significant growth", as per a Moneycontrol report.

"There will be clear signals towards growth momentum, which will spread as a positive contagion to all other terrains. That will be one of the impacts that most of us are recognising,” she added.

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On investment, Sitharaman noted that flows will not be affected aby only one factor and added that interest rates have been high globally for some time. Here too she emphasised that it is the emerging markets witnessing sustained investments flows. "Because sustained growth momentum is seen in emerging markets, investment flows will not be influenced only by interest rates remaining high and will not be confined to those locales where it is high,” she said.

Other major concerns

Sitharaman further said that the fragmentation of global supply chains is another major concern, as per an ANI. The finance minister is currently on an official visit to Marrakech, Morocco, attending the IMF-World Bank Annual Meetings 2023.

On October 13, she engaged in discussions with US Treasury Secretary Janet Yellen regarding the policy priorities of the International Monetary Fund (IMF) and how the institution should provide support to its members. The meeting took place on the sidelines of the ongoing IMF-World Bank Annual meetings in Marrakech, as reported by the Union Ministry of Finance.

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The roundtable discussion was hosted by Yellen, and a high-level seminar on "Strengthening the Financial Capacity of MDBs" was organized by the G20 India Presidency.

Sitharaman discussed the IMF's mandate and lending policies, advocating for a robust, quota-based, and well-funded IMF, as well as emphasising Poverty Reduction and Growth Trust (PRGT) Financing and IMF Governance reforms.

In her address, she also underscored the IMF's role in addressing bottlenecks in the debt restructuring process and promoting cooperation on debt issues. This includes co-chairing the Global Sovereign Debt Roundtable (GSDR) with India and the World Bank, as reported by the Finance Ministry.

Discussions held

Sitharaman emphasised the G20 Presidency of India's attention to the significance of multilateralism in working towards coordinated and consensus-based solutions to global challenges. She also pointed out that, in alignment with the changing needs of the membership, the IMF's primary focus should be on macroeconomic surveillance and policy guidance.

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During the seminar, participants discussed various possibilities to enhance financing for multilateral development banks (MDBs) and explored how these options could be most effectively implemented across the MDBs.

The finance minister of the Union also highlighted the importance of the IMF remaining well-capitalised through quota-based resources to maintain its central role in the global financial safety net.