Russia, China Water Down G20 Text on Geopolitical Tensions

World Bank President David Malpass said at the Munich Security Conference after the finance meeting that he was concerned the G20 "is not identifying the steps forward" to deal with a massive and growing debt overhang in developing countries.

"The G20 discussions on debt were really disappointing," said Eric LeCompte, executive director of the Jubilee USA Network, a faith-based organization campaigning for debt relief for poor countries. He said China was resisting steps to strengthen the bankruptcy-like G20 debt framework "so that they can cut deals on the side" with debtor countries.

Credibility Questions

Indonesia's finance minister, Sri Mulyani Indrawati, said other sticking points involved the reticence of some countries to endorse carbon-pricing as a tool to tackle climate change and how to help low-income countries such as Chad, Zambia and Ethiopia struggling with debt burdens made yet more unsustainable during the coronavirus pandemic.

"This also concerns the reputation and credibility of the G20 as a group of countries with the biggest economies to help countries that are in an uneasy situation," she said.

On other subjects, the final draft of the G20 text pledged to use "all available policy tools to address the impacts of the pandemic," while warning that future policy space was likely to be "narrower and uneven."

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"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 diverging pace of recovery from the pandemic is complicating the policy path for central banks. Expected steady interest rate hikes by the U.S. Federal Reserve have drawn attention to the potential fallout for emerging markets.

While cases of the Omicron variant of COVID-19 are receding in many wealthy countries, they are still rising in many developing nations including host country Indonesia.

The G20 text also pledged to ensure that a landmark deal last year setting a global minimum level of corporate tax could be put into force in 2023.