TEMPO.CO, Nusa Dua - Indonesian Finance Minister Sri Mulyani Indrawati today opened the third meeting of finance ministers and central bank governors of G20 member countries in Nusa Dua, Bali. In her opening remarks, Sri highlighted three issues that led to the current global crisis.

“At present, we are all threatened by the Russia-Ukraine war, the drastic increase in commodity prices, and the increase in global inflation,” said Sri, adding that the war triggered a food crisis when the world is just starting to recover from the COVID-19 pandemic.

The World Food Programme reports that the number of people affected by the food crisis will double. “From 135 million people [in 2019] to 276 million people [in 2022]. So a financing mechanism is necessary to save the community. Good macroeconomic policies are also needed to protect the country from the crisis,” she explained.

Simultaneously, the world is facing an extreme surge in energy prices. Global crude oil prices rose 350 percent within two years.

“This kind of condition last occurred in the 1970s. As a result, fuel shortages occurred everywhere.” If this happens for a long time, the minister went on, the impact will be very broad, such as a social and political crisis. “And we have witnessed this in a number of countries.”

The hike rate of global inflation is also faster than the readiness of countries to issue monetary policies as anticipative measures. In many developed and developing countries, central banks continue to raise interest rates. “Developing countries must adapt to this condition because they are threatened by foreign capital outflows and rising costs.”

The three threats, Sri underlined, have led to the rising vulnerability of the debt position of many countries, not only low and middle-income countries.

“These are issues that we must resolve together,” said Sri Mulyani before ministers of finance and governors of central banks, as well as international organizations.

PRAGA UTAMA

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