KÖNIGSWINTER, Germany — Top economic officials from the world’s advanced economies moved closer on Thursday to agreeing a global rescue package for Ukraine, with financial leaders negotiating the details of a multi-billion dollar plan to allow the Ukrainian government to operate amid the Russian attack.
The finance ministers of the Group of 7 Nations expressed optimism about the emergency finance deal on the first day of a two-day summit, where they will focus on providing aid to Ukraine and putting pressure on Russia as they face an economic backlash. avoid affecting the global economy. Officials are preoccupied with how to contain rising food and energy prices, leading some economists to worry about a global recession.
‘We must secure the liquidity of the Ukrainian state’ Christian Lindner, Germany’s finance minister, said at the meeting:† “We feel responsible for the ability of the Ukrainian state and its people to defend itself.”
The meeting on the outskirts of Bonn comes as the United States Senate is about to approve a $40 billion aid package for Ukraine on Thursday. The Biden administration is willing to spend $5 billion of those funds to support Ukraine’s day-to-day government activities for three months, and US officials have urged its allies to contribute another $10 billion.
The International Monetary Fund and Ukrainian officials have said the country needs $5 billion a month to continue paying government salaries, pensions and other expenses.
“I’m becoming more and more optimistic,” IMF director Kristalina Georgieva said on the sidelines of the Group of 7 meetings, referring to the plan to close Ukraine’s financial hole. “The problem will be the timing.”
Treasury Secretary Janet L. Yellen said this week she would ask her group of 7 colleagues to step up their aid.
“Ukraine has done a remarkable job repelling the Russian invasion, but they need our help and they need it now,” Ms Yellen said at a news conference on Wednesday.
European Union officials said this week that they were willing to contribute €9 billion in loans for economic assistance to Ukraine, but that countries within the EU would have to provide guarantees to support the program.
The conditions of the aid package were central during the meetings this week. Finance ministry officials have encouraged their colleagues to offer grants to Ukraine rather than loans and insist that loan terms are as favorable as possible.
Economic diplomats are rallying at a time of rising food and energy prices that threaten to dampen global growth. Ms. Georgieva said that central banks around the world face a difficult task as they try to tame inflation with higher interest rates without causing a downturn.
“The problem is, at what cost?” said Mrs. Georgieva. The question, she said, is “how do you navigate through it so you don’t end up in a recession.”
And the challenge is getting harder, she added: “We have crisis after crisis,” she said.
China poses another risk to the global economy, Ms Georgieva said, due to the strict ‘zero-covid’ lockdown policy it is employing to contain the coronavirus. She suggested China’s economic fundamentals were sound, but said policymakers were closely monitoring the potential impact of lockdowns on supply chains and inflation.
Policymakers also discuss additional sanctions against Russia, how the European Union can get rid of Russian energy and rising fears of global food insecurity.
The World Bank said on Wednesday it is committing $30 billion over the next 15 months to projects that will encourage food and fertilizer production and remove barriers to trade.