Redoubling aid to war-torn Ukraine 'single best' boost for global economy, says US Treasury Secretary Janet Yellen

Redoubling aid to war-torn Ukraine is the “single best” method to help the global economy, according to US Treasury Secretary Janet Yellen, along with supporting developing economies and addressing debt distress.

Yellen stated on the margins of a G20 finance ministers’ meeting in India that a “key priority” was “to redouble our support for Ukraine” in its fight against Russia.

Following a visit to Kyiv in February, Yellen stated that she had seen firsthand “the massive difference” that foreign help was making, both for civilians and the Ukrainian military.

“Ending this war is first and foremost a moral imperative,” Yellen told reporters in Gandhinagar. “But it’s also the single best thing we can do for the global economy.”

Russia’s invasion of Ukraine – both major breadbaskets that exported about a quarter of the world’s wheat supply – sent shockwaves through global markets, sending food and gasoline prices skyrocketing.

Unless Russia agrees to extend it, a pact that permitted Ukrainian grain shipments to restart would expire on Monday.

On Wednesday, the G7 leaders pledged their support for Ukraine for as long as it takes to repel Russia’s invasion.

The G7 plan establishes a framework under which individual states will reach bilateral agreements with Kiev outlining the armaments they would deliver and the reaction they will make if Russia ups the ante.

“Budgetary support is critical to Ukraine’s resistance,” Yellen said.

“By helping keep the economy and the government running, we are giving Ukraine the support it needs so it can fight for freedom and its sovereignty.”

She added that one of Washington’s “core goals” was to “combat Russia’s efforts to evade our sanctions”.

‘Debt vulnerabilities’

Yellen also said she would “push back on the idea that there is a trade-off” between support for Ukraine and support for the Global South.

She pointed to other work tackling debt distress and the reform of multilateral development banks — including the World Bank and other regional lenders — in efforts she said could unlock $200 billion over the next decade.

“Over the past few years, we have seen debt vulnerabilities mount for many countries as a result of the pandemic and Russia’s illegal war against Ukraine,” Yellen said.

Over half of all low-income countries are near or in debt distress, “double the share of countries that were in this situation in 2015”, she said.

On debt, she cited restructuring progress in Zambia — which she discussed with Chinese officials last week on a visit to Beijing — and said she expected Ghana and Sri Lanka debt treatments would soon be finalised.

She also spoke about efforts to strike a global tax deal.

Yellen said work was focused on creating a system in a world of online and global business that was “fairer and fit for purpose”, and to “end the race to the bottom on corporate tax rates”.

Multinationals, especially tech firms, are currently able to shift profits easily to countries with low tax rates even though they carry out only a small part of their activities there.