G20 finance ministers differ on debt relief and Ukraine conflict

Disagreements among members on debt restructuring for distressed economies

Italy's Finance Minister Giancarlo Giorgetti, left, with other G20 delegates on the outskirts of Bengaluru, India. Reuters

Finance leaders of the world's biggest economies were entangled in differences on Saturday over the war in Ukraine and on resolving the debt burden of distressed developing nations, participants said.

The meeting of finance ministers and central bank chiefs of the Group of 20, hosted by India, was set to end later in the day without a joint communique because there was no consensus on how to describe the conflict in Ukraine, delegates said.

The US and its allies in the Group of Seven industrial powers have been adamant in demanding the communique squarely condemn Russia for the invasion of its neighbour, which has been opposed by the Russian and Chinese delegations, they said.

Russia, a member of the G20 but not the G7, refers to its actions in Ukraine as a "special military operation".

India is pressing the meeting to avoid using the word "war" in any communique, G20 officials have told Reuters. India, which holds this year's G20 presidency, has kept a largely neutral stance on the war, declining to blame Russia for the invasion, seeking a diplomatic solution and sharply boosting its purchases of Russian oil.

India and China were among the nations that abstained on Thursday when the UN voted overwhelmingly to demand Moscow withdraw its troops from Ukraine and stop fighting.

Besides the G7 nations, the G20 bloc also includes such countries as Australia, Brazil and Saudi Arabia.

A senior G20 source said negotiations over the communique were difficult, with Russia and China blocking proposals by western countries.

The source and several other officials said barring a last-minute surprise, a consensus on the communique was unlikely and that the meeting was likely to end with a statement by the host summarising the discussions.

US Treasury Secretary Janet Yellen speaks during a meeting with Indian and US technology business leaders on the sidelines of the G20 financial conclave on the outskirts of Bengaluru. AP Photo

"In the absence of a consensus, the option for India would be to issue a chair statement," one official said.

India's foreign, finance and information ministries did not immediately respond to requests seeking comment.

On the sidelines, the International Monetary Fund held a meeting on Saturday with the World Bank, China, India, Saudi Arabia and the G7 on restructuring debt for distressed economies, but there were disagreements among members, said IMF managing director Kristalina Georgieva.

"We just finished a session in which it was clear that there is a commitment to bridge differences for the benefit of countries," Ms Georgieva, who co-chaired the roundtable with Indian Finance Minister Nirmala Sitharaman, told reporters.

Pressure has been building on China, the world's largest bilateral creditor, and other nations to take a large haircut in loans given to struggling developing nations.

In a video address to the G20 meeting on Friday, Chinese Finance Minister Liu Kun reiterated Beijing's position that the World Bank and other multilateral development banks participate in debt relief by taking haircuts alongside bilateral creditors.

US Treasury Secretary Janet Yellen said before the debt meeting that she would press all bilateral creditors, including China, to participate in meaningful discussions, adding that debt treatment for Zambia and financing assurances for Sri Lanka were "most urgent".

Zambia owed Beijing nearly $6 billion of a total external debt of $17 billion at the end of 2021, according to government data, while Ghana owes China $1.7 billion, according to the International Institute of Finance, a financial services trade association focused on emerging markets.

Sri Lanka owed Chinese lenders $7.4 billion — or nearly a fifth of public external debt — by the end of 2022, calculations by the China Africa Research Initiative think tank show.