Choo Kyung-ho "Welcomes Establishment of WB Financial Intermediary Fund for Pandemic Response, Korea to Support $30 Million"

Joint Statement (Communique) Adoption Fails... Chairman's Statement Replaced with Summary Due to Differences on Ukraine Situation

[Image source=AP Yonhap News]

[Asia Economy Bali (Indonesia) = Reporter Kim Hyewon] The Korean government has decided to contribute $30 million (approximately 40 billion KRW) to the Financial Intermediary Fund (FIF) for future pandemic response resources, which is scheduled to be launched within the World Bank (WB) this September.

Deputy Prime Minister Choo attended the G20 Finance Ministers and Central Bank Governors meeting held in Bali, Indonesia on the 15th-16th (local time), stating, "As the first step in preparing for the pandemic era, I welcome the passage of the FIF establishment proposal by the WB Board of Directors," and added, "We urge active support from the G20 and will also contribute $30 million to the FIF."

Deputy Prime Minister Choo emphasized that the FIF decision-making structure should ensure sufficient participation of beneficiary countries while being centered on contributing countries, and that the World Health Organization (WHO) should provide adequate technical advice during the discussion process. Besides Korea, Italy ($100 million), China ($50 million), the United Arab Emirates (UAE, $20 million), and Japan ($10 million initially) also announced their support plans. Member countries urged the WB to promptly proceed with follow-up measures for the September establishment.

Most G20 finance ministers and central bank governors attended the meeting in person. Enthusiastic discussions took place across seven sessions, including global economy and global health, exceeding the scheduled time. However, the G20 Finance Ministers and Central Bank Governors Communique was replaced by a Chair’s Summary due to disagreements among member countries regarding the causes of increased global economic uncertainty. Opinions diverged concerning the Ukraine war, preventing the adoption of a joint statement containing agreed content. After the closing, Deputy Prime Minister Choo told reporters, "Efforts to reach a joint statement agreement repeatedly faced difficulties at the working level and ultimately failed," adding, "The section related to the Russia-Ukraine war was a major obstacle."

Member countries agreed that the recovery has significantly weakened since the April finance ministers meeting due to ongoing COVID-19 impacts and inflation. It was also pointed out that the Russia-Ukraine war further accelerates mismatches in supply and demand, supply chain disruptions, and rising food and raw material prices, causing relatively greater difficulties for low-income countries and vulnerable groups. In this context, strong criticism was directed at Russian President Vladimir Putin and Russia by Western countries.

U.S. Treasury Secretary Janet Yellen strongly condemned the current global economic crisis as entirely due to Russia’s brutal and unjust war, while Canadian Finance Minister Chrystia Freeland also criticized, saying, "Those committing war crimes are not only generals but also economic officials who enable the war to occur and continue," holding them responsible for war crimes as they supported the invasion of Ukraine. Invited to this meeting, Ukrainian Finance Minister Serhiy Marchenko emphasized the need for "harsher sanctions" against Russia.

Other G20 representatives such as China, India, and South Africa did not join in the criticism of Russia. Unlike the finance ministers meeting in April or the foreign ministers meeting on the 8th, no boycott incidents occurred.

[Image source=Reuters Yonhap News]

At this meeting, Deputy Prime Minister Choo diagnosed, "The global economy is in a complex crisis situation with rising prices of raw materials and grains, expanding inflation threats, and heightened financial market instability," then stressed the importance of strengthening global economic interconnectedness through free trade and multilateral economic and trade platforms, closely coordinating monetary policy normalization for balanced development between advanced and developing countries, and pursuing structural efforts for sustainable growth such as climate change and digital transformation.

In the international financial system session, which Korea co-chairs, member countries agreed on the need to accelerate efforts to alleviate debt burdens of vulnerable low-income countries amid concerns about worsening debt vulnerabilities. They also urged that the Resilience and Sustainability Trust, established at the IMF in May, be fully operational by this year’s IMF Annual Meeting and emphasized expanding lending capacity of multilateral development banks. Deputy Prime Minister Choo mentioned the necessity of clear communication and policy coordination among member countries to respond to increased volatility in global capital flows. He also called for efforts to produce tangible outcomes such as establishing guidelines for debt relief procedures for vulnerable countries and supported expanding lending capabilities of multilateral development banks through capital adequacy reviews.

In the sustainable finance session, the G20 reaffirmed its commitment to addressing climate change and biodiversity loss and recognized the importance of an optimal policy mix including both price and non-price instruments tailored to each country’s circumstances in climate change response. Deputy Prime Minister Choo urged the continuation of carbon neutrality efforts for a sustainable economy despite weakening global economic recovery momentum and called for establishing an optimal policy mix between price and non-price policies in the carbon neutrality transition. He also welcomed the establishment of the G20 transition finance framework for carbon neutrality transition.

In the final international taxation session, member countries reaffirmed their commitment to the swift implementation of Digital Tax Pillars 1 and 2 and urged the prompt conclusion of ongoing major discussions on Pillar 1 issues. Deputy Prime Minister Choo emphasized the need for measures to minimize corporate burdens, such as inducing a smooth transition through phased introduction regarding Digital Tax Pillar 1, where detailed issues like double taxation elimination are under discussion. Regarding Pillar 2, which has entered the implementation phase, he explained the necessity of establishing an effective implementation system and introduced Korea’s legislative progress.

Through this meeting, the Korean government shared awareness of global economic trends and outlooks and confirmed the positions of major countries including the G7 and China on key global issues such as pandemic and climate change response. The Ministry of Economy and Finance plans to steadily pursue major economic policy tasks such as revitalizing the economy through regulatory reform and improving economic structure through structural reforms, given the high possibility of expanding global economic uncertainties. After consultations with related ministries, Korea will prepare its stance on major G20 issues and strive to ensure that its position is actively reflected at the upcoming G20 Finance Ministers meeting in October and the G20 Summit in November.

This content was produced with the assistance of AI translation services.