Yellen adds to calls for financial aid for Ukraine

US treasury secretary Janet Yellen on Thursday stepped up calls for increased financing support to Ukraine to help it battle the year-old Russian invasion as the US prepares a further $10bn in economic assistance.

Yellen, who was speaking before G20 finance leaders gathered on the outskirts of the Indian technology hub of Bengaluru, said it was critical for the IMF to “move swiftly” towards a fully financed loan programme for Ukraine.

“As President [Joe] Biden has said, we will stand with Ukraine in its fight — for as long as it takes,” she added. “Continued, robust support for Ukraine will be a major topic of discussion during my time here in India.”

Ukraine is seeking a $15bn multiyear IMF programme, Prime Minister Denys Shmyhal said on Monday after meeting IMF MD Kristalina Georgieva in Kyiv.

Yellen said that previous US military, economic and humanitarian aid totalling $46bn has allowed Ukraine to preserve economic and financial stability under “extraordinary circumstances”.

“Our economic assistance is making Ukraine’s resistance possible by supporting the home front: funding critical public services and helping keep the government running. In the coming months, we expect to provide around $10bn in additional economic support for Ukraine.”

The US aid was approved by Congress in December as part of a broad government funding bill that included a new $45bn package of emergency military and other assistance to the war-torn country.

Mitigating spillovers

Yellen said the global economy “is in a better place today than many predicted just a few months ago”, as concerns fade that the spillover effect of the war in Ukraine would cause growth to slow sharply.

Headline inflation was beginning to ease in the US and around the world, though it was important for G20 finance officials to keep working to quell inflation, Yellen said, adding: “We are not out of the woods yet.”

Price caps imposed by Western countries on Russian crude oil exports and petroleum products were helping to stabilise global energy prices while reducing Russia’s energy revenues “substantially”, she said.

“Last month, the Kremlin’s oil revenue was nearly 60% lower than in the immediate aftermath of the invasion,” Yellen said, adding that it was enabling emerging markets, including India, to negotiate steep discounts on Russian oil.

Yellen said that G20 countries need to work to ease the debt overhang that is putting more than half of low-income countries in distress.

“I will continue to push for all bilateral official creditors, including China, to participate in meaningful debt treatments for developing countries and emerging markets in distress,” she said. Debt treatment for Zambia and financing assurances for Sri Lanka were “most urgent”.

The G20 meetings also will work to advance reforms to the World Bank and other multilateral development banks to expand their lending to fight climate change, pandemics and other global challenges, Yellen said.

She commended departing World Bank President David Malpass, saying that the bank under his leadership has “measurably improved the lives of people around the world”.

Reuters