US debt problem overshadows first day of G7 Finance meeting

He US debt ceiling has overshadowed the first of the three days of meetings of finance ministers and central bank governors of the G7 countries that started today in the Japanese city of Niigata.

In one of the first appearances at the financial meeting, before the first multilateral meeting, the US Treasury Secretary, Janet Yellen, referred to Congress’s blockade of an increase in the national debt ceiling and called for action as soon as possible and avoid a payment default.

“Under no circumstances should we allow a payment default” that “it would threaten the gains we have worked so hard for in recent years in our recovery from the pandemic”, he warned.

Yellen also warned of the risk of “trigger a global recession that would set us back much further“, in addition to “undermine the global economic leadership of the United States”, at a press conference at the Toki Messe convention center.

“There is no good reason to create a crisis created by ourselves“, he pointed Yellenwhich asked Congress to “act fast” to raise or suspend the debt ceiling again, as it has already done “on some 80 occasions since 1960”.

Financial analysts predict that, under current circumstances, USA will be unable to meet its obligations in June, so Yellen called to act “urgent”.

The interest generated by the US secretary’s statements led the Japanese Finance Minister, shunichi suzukito clarify that the US debt will not be one of the pillars of the talks these days in Niigata.

“I don’t think we’ll talk about that in depth at this meeting. Rather, I think it is important to review specific cases such as the bankruptcy of banks in terms of regulation and given the situation of certain financial uncertainty in general”, said the Japanese head of Finance at a simultaneous press conference.

Suzuki seeks to focus the debate on broader issues, such as a strengthening of financial systems that contributes to mitigating the potential effect of episodes such as the recent collapse of various financial institutions in the United States or Switzerland Credit Suisse.

Continued support for Ukraine

One of the points that will play a leading role in the joint declaration that the ministers plan to adopt at the end of their meetings on Saturday will be financial support for Ukraine.

The G7 will review during these days together with the other participants, including the International Monetary Fund or the European Commission, the “effect” of the assistance provided to Kiev so far and also the impact of the sanctions imposed on Russia by more than thirty countries, explained Suzuki.

Specifically, “measures to prevent Russia from circumventing its sanctions will be addressed above all”, necessary to continue exerting pressure on the financing of the conflict, and the possibility of “take further action when necessary”, added the minister.

Among other issues on the agenda are energy and food insecurity and global inflation, which have been exacerbated precisely by the Russian-Ukrainian conflict; in addition to financing efforts against climate change or aid for the construction of infrastructures in developing countries.

In this sense, and in an unusual movement in this type of meeting, the Japanese presidency of the G7 has invited developing countries and emerging powers, including Brazil, India, Indonesia and Comoros, to participate in the debates these days. , rotating presidency of the African Union.

Source: EFE