Redoubling support for war-stricken Ukraine is the “single best” way to aid the global economy, US Treasury Secretary Janet Yellen said Sunday, along with boosting emerging economies and tackling debt distress.
Yellen, speaking on the sidelines of a G20 finance minister summit in India, said a “key priority” was “to redouble our support for Ukraine” in its defence against Russia.
After visiting Kyiv in February, Yellen said she had seen first-hand “the massive difference” that foreign assistance was making, both to civilians and the Ukrainian military.
“Ending this war is first and foremost a moral imperative,” Yellen told reporters in Gandhinagar. “But it’s also the single best thing we can do for the global economy.”
Russia’s invasion of Ukraine — both global breadbaskets that together exported almost a quarter of the world’s wheat supply — triggered shockwaves in global economies by sending prices for food and fuel shooting up.
A deal that allowed Ukrainian grain exports to resume is due to expire on Monday, unless Russia agrees to renew it.
On Wednesday, the leaders of the G7 powers promised to support Ukraine for as long as it takes to defeat Russia’s invasion.
The G7 plan provides a framework under which individual nations will agree bilateral deals with Kyiv detailing the weapons they will give and response they will make if Russia ups the ante.
“Budgetary support is critical to Ukraine’s resistance,” Yellen said.
“By helping keep the economy and the government running, we are giving Ukraine the support it needs so it can fight for freedom and its sovereignty.”
She added that one of Washington’s “core goals” was to “combat Russia’s efforts to evade our sanctions”.
– ‘Debt vulnerabilities’ –
Yellen also said she would “push back on the idea that there is a trade-off” between support for Ukraine and support for the Global South.
She pointed to other work tackling debt distress and the reform of multilateral development banks — including the World Bank and other regional lenders — in efforts she said could unlock $200 billion over the next decade.
“Over the past few years, we have seen debt vulnerabilities mount for many countries as a result of the pandemic and Russia’s illegal war against Ukraine,” Yellen said.
Over half of all low-income countries are near or in debt distress, “double the share of countries that were in this situation in 2015”, she said.
On debt, she cited restructuring progress in Zambia — which she discussed with Chinese officials last week on a visit to Beijing — and said she expected Ghana and Sri Lanka debt treatments would soon be finalised.
She also spoke about efforts to strike a global tax deal.
Yellen said work was focused on creating a system in a world of online and global business that was “fairer and fit for purpose”, and to “end the race to the bottom on corporate tax rates”.
Multinationals, especially tech firms, are currently able to shift profits easily to countries with low tax rates even though they carry out only a small part of their activities there.
