– Secretary of the Treasury Janet L. Yellen’s Remarks as Prepared for Delivery at Press Conference in Bengaluru, India.
I’d first like to thank Finance Minister Nirmala Sitharaman for her leadership of the G20 during India’s presidency. Tomorrow is the one-year mark of Russia’s illegal and unjustified full-scale invasion of Ukraine. So today, I’d like to start by speaking on Russia’s war. Then, I’ll turn to progress we’ve made on the global economy, as well as our work on longer-term challenges.
By Janet Yellen
Russia’s illegal and unjustified war against Ukraine
When Vladimir Putin launched his brutal assault one year ago, some believed that Russia would secure a quick and decisive victory over Kyiv. Putin himself thought that he would achieve a victory “at minimal cost,” in the words of CIA director Bill Burns. One year later, Putin’s war has been a strategic failure for the Kremlin. Ukraine still stands. And NATO and our global coalition stand united behind it.
Ukraine has mounted a heroic resistance. We have seen the bravery of the Ukrainian military on the battlefield. We have seen the steady hand of Ukraine’s economic and finance officials. They have fought to preserve Ukraine’s economic and financial stability under extraordinary circumstances. And of course, we have seen the strength of the Ukrainian people. They are standing strong amid a terrible war.
The United States and our allies are proud to support the Ukrainian people’s fight for freedom. The United States has provided over $46 billion in security, economic, and humanitarian assistance to Ukraine. Our military assistance includes key defensive weapons that Ukraine has asked for – such as the Patriot missile defense system. And 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 $10 billion in additional economic support for Ukraine.
Since the early days of the war, we have partnered with a multilateral coalition of over 30 countries to impose severe economic costs on Russia for its brutal assault. Our twin goals are to degrade Russia’s military-industrial complex and reduce the revenues that it can use to fund its war. We are seeing the impacts of these actions. The Russian military is struggling to replace over 9,000 pieces of heavy military equipment that it has lost since February 2022. It has suffered production shut-downs at key defense-industrial facilities. Further, Russia’s economy has become increasingly isolated. Estimates indicate that nearly a million Russians may have left the country last year. This is putting downward pressure on its productive capacity going forward.
As president Biden has said, we will stand with Ukraine in its fight – for as long as it takes. We commend our allies for stepping up their direct assistance. And we believe it’s critical that the IMF move swiftly toward a fully financed program for Ukraine – as they have said they will do. Continued, robust support for Ukraine will be a major topic of discussion during my time here in India.
Progress on macroeconomy and mitigating Ssillovers from Russia’s war on Ukraine
Over the next couple of days, I also look forward to working with my counterparts to advance work on the global macroeconomy.
While there are significant headwinds, it’s fair to say that the global economy is in a better place today than many predicted just a few months ago. In the fall, many were worried about a sharp economic slowdown across the world. The challenges we face are real, and the future is always uncertain. But the outlook has improved since we gathered in the fall. In its most recent estimates, the IMF forecasts global growth of 3.2 percent during 2023 – a notable upgrade from its October report.
In the United States, our economy remains resilient. Year-on-year headline inflation has moderated over the past few months – as supply chain pressures have eased and global imbalances have subsided. At the same time, our labor market remains strong. In January, US unemployment hit a low not seen in over a half-century.
The progress on our global macroeconomy is a result of our collective work. And it underscores the importance of redoubling our efforts going forward.
Forums like the G20 are important venues for macroeconomic cooperation. During our meetings last fall, there was a shared view among my counterparts that we must take decisive action on the challenges that we face in our own countries. That includes combatting high inflation where it exists. It was also important to us to be attentive to the spillovers of macroeconomic tightening from major economies to the rest of the world.
While there’s much more work to do, we are beginning to see lower headline inflation around the globe. In emerging markets, financial conditions remain relatively tight, but have begun to show signs of easing. At the same time, we know that a number of vulnerable countries continue to face acute distress. We are not out of the woods yet. So, I am looking forward to the opportunity this week to continue our close communication with other major economies.
Our progress has also been made possible through our actions to mitigate spillovers from Russia’s war on Ukraine. Vladimir Putin’s immoral war has exacerbated the stress on our food systems. Since last year, the United States has committed more than $13 billion in humanitarian and food security assistance. We have also rallied international financial institutions to implement a robust action plan to address food insecurity. Further, we have worked with countries to avoid export restrictions and enable food to flow more freely – including through the Black Sea Grain Initiative. This life-saving initiative has improved supply and lowered prices. It must be extended past March. More work will be done this year at the G20 on these food security challenges. I believe this work cannot come soon enough.
Another focus has been global energy markets. In December, the United States and our coalition implemented a cap on the price of Russian crude oil. And earlier this month, we placed caps on the prices of Russian refined products like diesel and fuel oil. So far, we see clear signs that our policy is working to reduce Russian revenues and stabilize global energy markets. Even as global oil prices have remained relatively stable over the past few months, Russian oil prices have fallen substantially. Last month, the Kremlin’s oil revenue was nearly 60 percent lower than in the immediate aftermath of the invasion. We have continued to see emerging markets negotiate steep discounts on Russian oil – which keeps oil on the global market but sharply reduces the Kremlin’s take.
Tackling longer-term challenges and building a stronger global economy
Over the next two days, I also look forward to continuing the G20’s work to build a stronger and more resilient global economy. This includes advancing work on debt, climate change, and the evolution of the multilateral development banks.
First, we need to work together to ease the debt overhang that is holding back too many countries. The IMF estimates that around 55 percent of low-income countries are close to or in debt 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. Most urgent is the need to provide debt treatment to Zambia, and to commit to specific and credible financing assurances for Sri Lanka. Later this week, I am also looking forward to robust discussions about the Common Framework process to help countries like Ghana. I will also be discussing international coordination on debt restructuring for middle-income countries.
Second, we must unlock more investments for the clean energy transition. The United States is making a historic investment in our own transition through the Inflation Reduction Act. This law will have positive spillovers for other countries. This includes reducing the costs of clean energy technologies. During the upcoming meetings, I am eager to continue working with our partners as co-chair of the Sustainable Finance Working Group. Our goal is to accelerate the transition to a net-zero economy, particularly by boosting private capital flows.
Third, we look forward to accelerating our momentum for the evolution of the multilateral development banks. Four months ago, I called for the evolution of the MDB system ahead of the World Bank and IMF annual meetings. The MDBs have made tremendous progress in advancing poverty alleviation and inclusive development. But it’s critical that they integrate work on global challenges into their core mission to sustain progress on these priorities. We are in the process of working with shareholders and management to evolve the World Bank. Over the next couple of days, I will be discussing how the G20 can build on the momentum at the World Bank for ambitious reforms. I’ll also discuss how we can accelerate the evolution of regional development banks.
