G-20 finance leaders tackle dire fallout from war in Ukraine

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U.S. Treasury Secretary Janet Yellen speaks during a news conference in Nusa Dua, Bali, Indonesia on Thursday, July 14, 2022. Yellen and other top financial officials of the Group of 20 rich and industrial nations are gathering in the Indonesian island of Bali for meetings that begin Friday. (AP Photo/Firdia Lisnawati)

BANGKOK – U.S. Treasury Secretary Janet Yellen has urged leaders of major economies to work more closely in countering the impact from Russia’s invasion of Ukraine.

Yellen and other top financial officials from the Group of 20 leading rich and developing nations are gathering on the Indonesian island of Bali for meetings that begin Friday. Yellen has been seeking support for a price cap on Russian oil that might help bring energy costs under control and alleviate the decades-high inflation seen in many countries.

Oil prices have soared, partly due to the war in Ukraine, pushing up energy costs that accounted for about half the increase in the 9.1% annual jump in U.S. consumer prices in June, Yellen noted.

It would be the latest effort to starve Russia's military of revenue on top of thousands of sanctions already imposed to punish Moscow for its invasion.

“A price cap on Russian oil is one of our most powerful tools to address the pain Americans and families across the world are feeling at the gas pump and the grocery store right now, a limit on the price of Russian oil,” Yellen said at news briefing in Bali also shown online.

Yellen said no price had yet been determined for such a cap, but the level would have to be one “that clearly gives Russia an incentive to continue to produce, that would make production profitable for Russia.”

She said she was “hopeful" that countries such as China and India that recently boosted imports of Russian crude oil, sold at steep discounts, would see it as being in their own self-interest to observe the price cap.

Without a price cap, a European Union and probably a U.S. ban on providing insurance and other financial services would take effect. “So, we’re proposing an exception that would allow Russia to export as long as the price doesn’t exceed a yet-to-be-determined level,” Yellen said.

The impact from the war has fallen most heavily on economies already struggling with mounting debt and other crises. Yellen said a key objective of the Bali meetings would be to push countries such as China to do more to help debt-distressed countries including Sri Lanka and Pakistan to restructure their obligations.

The head of the International Monetary Fund, meanwhile, warned that the outlook for the global economy has darkened and might get worse without better coordinated cooperation on a wide range of issues.

Kristalina Georgieva said in a blog post that decisive action is needed to tamp down inflation and keep the world moving toward a recovery from the coronavirus pandemic.

She said central banks need to act now to help bring soaring inflation under control to minimize later shocks to economies and financial systems. Some 75 central banks already have raised interest rates, on average 3.8 times, in the past year to try to rein in inflation, she noted.

“It is going to be a tough 2022 — and possibly an even tougher 2023, with increased risk of recession," she said.

Countries whose economies already are in crisis, such as Sri Lanka and Pakistan, are turning to the IMF, a lending arm of the World Bank, and other institutions to help them cope with their surging debts and dwindling foreign reserves — problems that have ballooned as prices for oil, wheat and other commodities have soared, partly due to Russia's attack on Ukraine.

“Time is not on our side," Georgieva said, describing such efforts as an “urgent necessity."