G20 finance leaders flag inflation, geopolitical risks to global recovery -draft communique

FILE PHOTO - Sun sets over the skyline and ECB in Frankfurt
FILE PHOTO – The headquarter of the European Central Bank (ECB) is seen during sunset ahead of the ECB?s governing council meeting later this week in Frankfurt, Germany, October 25, 2021. REUTERS/Kai Pfaffenbach

February 17, 2022

By Christian Kraemer and David Lawder

(Reuters) – Finance leaders from the Group of 20 leading economies said that rising inflation prompted by supply disruptions poses risks to the global economic outlook and an “asynchronous” recovery from the COVID-19 pandemic, a draft communique obtained by Reuters showed on Thursday.

“We will continue to strengthen the resilience of global supply chains. We remain vigilant of the impacts of these challenges on our economies,” the G20 finance ministers and central bank governors said in the draft statement, which will be finalized on Friday when their partly virtual meeting hosted by Indonesia concludes.

“We will also continue to monitor major global risks, including those arising from [current] geopolitical tensions and macroeconomic and financial vulnerabilities,” the ministers said.

The statement contained no direct reference to the crisis on the Ukraine-Russian border, and the word “current” in brackets indicates that it may be deleted. Russia is a member of the G20 major economies.

The finance leaders said inflation rates are currently elevated in many countries, prompted in part by “supply disruptions, supply demand mismatches and increased commodity prices including energy prices.””Central banks will act where necessary to ensure price stability in line with their respective mandates, while remaining committed to clear communication of their policy stances,” the ministers and governors said, adding that central bank independence was crucial for credibility.

The G20 finance leaders affirmed their commitment to developing the rules and other instruments to implement a global tax agreement reached last year to put the new rules into effect in 2023.

They also pledged to “do more to secure (the) long-term success” of a G20 common debt restructuring framework for poor countries, although that language also was in brackets, making it subject to change.

On climate change, the G20 ministers said reaching carbon emissions “net zero” goals should include a full range of tools, including “if appropriate, the use of carbon pricing mechanisms and incentives and phase out and rationalize, over the medium term, inefficient fossil fuel subsidies that encourage wasteful consumption.”

(Reporting by Christian Kraemer and David Lawder; Additional reporting by Doina Chiacu and Jan Strupczewski; Editing by Toby Chopra and Andrea Ricci)

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