Ukraine: the G7 plan to recover the country in an accelerated way

The G7 countries tried this Thursday to complete a new round of financing to keep Ukraine’s budget afloat without losing sight of the global economic consequences of the war launched by Russia.

(Read here: Russia assures that it is willing to resume negotiations with Ukraine)

Meeting in Königswinter, in western Germany, the economic ministers of seven industrial powers (EUnited States, Japan, Canada, France, Italy, United Kingdom and Germany) began to calculate how much each country can contribute in the short term.

(It may interest you: Russia prepares the ground for an extensive war in Ukraine)

On the part of the United States, from the huge aid package of 40,000 million dollars for Ukraine announced last weekabout 7,500 million should go to the country’s budget in the short term.

Germany announced on Thursday a contribution of 1,000 million euros (1,060 million dollars).

The most urgent thing is to provide Ukraine with liquidity for the current quarter.

(See here: They ask for life imprisonment for Russian tried for war crimes in kyiv)

“We are collecting the various pledges of direct aid to continue financing Ukraine’s state functions with our means,” said German Finance Minister Christian Lindner, whose country is chairing the G7 this year.

Lindner said he expects “further progress” and additional commitments before the meeting ends on Friday. She seeks to obtain more than 10,000 million euros for Ukraine.To maintain the country’s economy, kyiv estimates that it needs $5 billion a month.

Avoid ‘lasting’ inflation

“Ukraine needs … our help and it needs it now,” Treasury Secretary Janet Yellen said upon arrival in Königswinter, outside Bonn.

On Wednesday, the European Commission proposed a “new macro-financial aid” to Ukraine for this year of “up to 9,000 million euros“, about 9,400 million dollars.

The proportion of loans and direct aid in this new support package will be on the agenda of the G7 discussions.

The British government indicated on Thursday that it plans to grant 50 million pounds (59 million euros, 62.5 million dollars) to guarantee the supply of electricity to Ukrainians, through the European Bank for Reconstruction and Development (EBRD).

The Russian offensive caused a sharp increase in the prices of energy, raw materials and agricultural products in all world markets.

But, according to Lindner, a “clear signal” from policymakers is needed to prevent inflation from become a “lasting problem” for the economy.

This explosion in prices is being felt especially in developing countries and aggravates the risk of a food crisis in many regions of the world.

“We are seeing serious economic consequences, especially for low-income countries,” the German economy minister said.

called to china

With 60% of low-income countries in over-indebtedness or at risk of becoming so soon, Christian Lindner urged China, “one of the world’s leading creditors,” to be “more transparent” in its lending to impoverished countries.

“Beijing has always been very reticent in this respect. That can no longer be justified: we must quickly find out who is indebted and how” to better coordinate aid to those countries.

In the longer term, discussions regarding the reconstruction of Ukraine “have only just begun,” Yellen stressed, although there is already talk of the possibility of using Russian assets frozen by Western sanctions.

Germany believes that it is a “politically conceivable” scenario, but stressed, like France, that there are many legal obstacles.

“We have to carefully examine the limitations imposed on us,” the French finance ministry said.

The war launched by Russia should cause a massive contraction of the Ukrainian economy, estimated at 30% by the EBRD, and even 45% by the World Bank.

AFP

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