Meeting of G7 Finance Ministers and Central Bank Governors
Keeping Ukraine’s finances afloat, countering rising food prices, supporting vulnerable countries: the big moneymakers of the G7 will not have enough of their meeting in Germany to tackle all the economic repercussions of the war launched by Moscow in Ukraine.
The first urgency of this meeting, Thursday and Friday, of the finance ministers of the seven industrial powers – United States, Japan, Canada, France, Italy, United Kingdom, Germany – is to complete a new round of table to cover the Ukrainian budget for the current quarter. To run the country’s economy, kyiv assesses its needs at 5 billion dollars (4.75 billion euros) per month.
“We are asking for high financial support, but the price is also high. It’s a way for us to survive.”had recently explained to Agence France-Presse, Ukrainian Finance Minister Sergii Marchenko.
Of the colossal $40 billion extension for Ukraine put on track last week by US President Joe Biden, some $7.5 billion should fill the Ukrainian budget in the short term, according to G7 ministerial sources.
“I will ask my counterparts to join us in increasing their financial support for Ukraine. Ukraine has (…) need our help and they need it now”hammered Treasury Secretary Janet Yellen on her arrival in Königswinter, a leafy suburb of Bonn (West) where the meeting is being held.
On Wednesday, the European Commission for its part proposed a “new macro-financial assistance” to Ukraine for this year in the amount “up to 9 billion euros”. The proportion of loans and direct aid in this new support package will be on the menu of the G7 discussions.
This is to ensure the solvency of Ukraine “for the next few days, the next few weeks”commented the German finance minister, Christian Lindner, on the eve of the main meetings. “We all have a responsibility to make a visible contribution”added the minister whose country is chairing the G7 this year.
While the war continues to ravage a large part of the Ukrainian territory, discussions are already under way on aid for the reconstruction of the country. The discussions “just getting started”underlined Mr.me Yellen in Königswinter, but avenues of financing are mentioned, such as using Russian assets frozen under Western sanctions.
If Germany deems this hypothesis “politically conceivable”it emphasizes, like France, that there are many legal obstacles. “We have to look carefully at the constraints that are imposed on us”says the French Ministry of Finance. “We must respect the rule of law, even if we are dealing with Russian oligarchs”observes the German minister.
The war launched by Russia should cause a massive contraction of the Ukrainian economy, estimated at 30% by the European Bank for Reconstruction and Development (EBRD), and even 45% by the World Bank.