The most effective method to bolster the global economy is to strengthen our aid to Ukraine, as the country grapples with conflict, according to U.S. Treasury Secretary Janet Yellen, speaking on Sunday. Yellen underscored that it was essential to intensify efforts to help Ukraine while addressing the global challenges of burgeoning debt issues and supporting developing economies.
Yellen's comments came on the margins of a G20 finance ministers' meeting in India, where she emphasized the need to augment aid to Ukraine, currently locked in a defensive struggle against Russia. A trip to Kyiv in February had given Yellen a clear picture of the profound impact international assistance was having on both civilians and the Ukrainian military.
Addressing reporters in Gandhinagar, Yellen affirmed, "The cessation of this war is not just a moral obligation, but also the most effective measure to invigorate the global economy."
The conflict, triggered by Russia's invasion of Ukraine, sent economic tremors across the globe as both nations, accounting for nearly a quarter of the world's wheat supply, saw the costs of food and fuel skyrocket. A decision on the renewal of an agreement enabling Ukraine to continue exporting grain, which is set to expire on Monday, is eagerly awaited.
Earlier in the week, G7 leaders had pledged unwavering support for Ukraine until it successfully repels Russia's assault. The proposed G7 strategy includes an arrangement allowing nations to conclude individual agreements with Kyiv, outlining the specific military assistance they will provide and their planned responses to potential escalations by Russia.
Yellen insisted on the importance of financial aid to Ukraine's resilience, emphasizing that, "Helping to maintain the function of the economy and the government, we provide the necessary backing for Ukraine in its struggle for freedom and sovereignty."
She went on to highlight one of the primary objectives of the US administration was to thwart Russian attempts to circumvent sanctions imposed on it.
Discussing the issue of 'Debt Vulnerabilities,' Yellen was quick to reject the notion that there was a dilemma between backing Ukraine and aiding the Global South. She elaborated on various initiatives to manage debt distress and reshape multilateral development banks, including the World Bank and other regional institutions. She suggested these efforts could free up as much as $200 billion over the coming decade.
"Due to the aftermath of the pandemic and Russia's unlawful war on Ukraine, we have witnessed a surge in debt vulnerabilities for many nations in recent years," Yellen observed. She noted that over half of all low-income countries were teetering on the brink of, or were already in, debt distress, a figure that has doubled since 2015.
She shared progress on debt restructuring in Zambia, which she discussed with Chinese officials during a recent visit to Beijing. She also expressed confidence that debt treatments for Ghana and Sri Lanka would be finalized soon.
Yellen also touched on the pressing issue of reaching a global tax agreement, saying the goal was to devise a system that was equitable and adaptable to the age of digital and international business, putting an end to the downward spiral of corporate tax rates.
She pointed out the current scenario allows multinationals, particularly tech companies, to effortlessly relocate profits to low-tax jurisdictions, despite conducting only a minor portion of their operations in these areas.
