Money for crisis-hit Ukraine tops G7 agenda; inflation, food a concern

Group of Seven financial leaders are likely to agree on around $15 billion to help Ukraine pay its bills in coming months, but surging inflation, climate change, supply chains and the impending food crisis are also on the agenda.

Finance ministers and central bank governors of the United States, Japan, Canada, Britain, Germany, France and Italy — the G7 — are holding talks as Ukraine, invaded by Russia on February 24, is struggling to fend off the attack and is running out of cash.

“We have to secure the liquidity of the Ukrainian state,” German Finance Minister Christian Lindner, whose country holds the rotating presidency of the group, told reporters on entering the talks. Lindner said he was optimistic the group would be able to provide the funding Ukraine will need over coming months.

“The war in Ukraine … also entails additional risks for the development of the world eco­nomy … inflation, but also the lack of recovery after the pandemic. Therefore, we will have to discuss what we can do tog­ether in our respective areas of responsibility to avoid stagflation scenarios,” Lindner said.

The war is a game-changer for Western powers, forcing them to rethink decades-old relations with Russia not only in terms of security, but also in energy, food and global supply alliances from microchips to rare earths.

IMF MD Kristalina Georgie­va said she was “getting more optimistic” about a swift funding deal for Ukraine that will p­rovide about $5 billion a month for the next three months and allow Kyiv to avoid “terrible, terrible damage” from hyperinflation. Ukraine estimates it needs such amounts to keep public employees’ salaries paid and the administration working despite the daily destruction wrought by Russia.

More broadly, the G7 policymakers are also wrestling with the question of how to contain inflation and increase sanctions pressure on Russia without causing recession. More and more officials bring up the term “stagflation” — the dreaded 1970s combination of persistent price increases coupled with economic stagnation.

“Ukraine is overshadowing these meetings. But there are other issues that must be discu­ssed,” a G7 official, said, adding that debt, international taxation, climate change and global health were all up for debate.

The European Commission offered on Wednesday to provide up to 9 billion euros ($9.44 billion) in loans to Ukraine, financed from EU borrowing guaranteed by EU governments, to cover Kyiv’s needs until the end of June.

Japan on Thursday pledged to double its aid for Ukraine to $600 million to help it cover its near-term needs.

The EU executive also proposed to set up a fund of unsp­ecified size of grants and loans for Ukraine, possibly jointly borrowed by the EU, to pay for its post-war reconstruction.

Some economists estimate such a project would require between 500 billion euros and 2 trillion euros ($524 billion to $2.09 trillion), with estimates frequently changing depending on the length of the conflict and the scope of destruction.

With sums of such magnitude, the EU is considering not only a new joint borrowing project, modelled on the pandemic recovery fund, but also seizing the now frozen Russian assets in the EU, as sources of financing.

UK sanctions Russian airlines’ slots sales

Britain said on Thursday it was introduci­ng new sanctions against the Russian airline sector to prevent state-owned Aeroflot, Ural Airlines and Rossiya Airlines from selling their unused landing slots at British airports. The UK government said it estimated the landing slots were worth 50 million pounds ($61.9 million).”We’ve already closed our airspace to Russian airlines. Today we’re making sure they can’t cash in their lucrative landing slots at our airports,” British Foreign Secretary Liz Truss said. “Every economic sanction reinforces our clear message to (Russian President Vladimir) Putin, “we will not stop until Ukraine prevails.” (Reuters).

Italy freezes 146 mn euros assets of Superjet

Italy’s police said they froze assets worth ^146 million ($153 million) owned by Superjet International, a joint venture between Russia’s Sukhoi and Leonardo, as the country chases businesses hit by EU sanctions against Moscow.

The move targets Sukhoi’s 90 per cent stake in the joint venture and other assets including five aircraft, Italy’s finance police said. The 10 per cent stake owned by Leonardo has not been frozen, they said. Superjet international is based in Venice and employs around 140 workers in Italy. The financial security committee of the economy ministry issued the seizure order against the holding firm. (Agencies).

McDonald’s sells Russian business

McDonald’s has begun the sale of its rest­aurants in Russia 30 years after the burger chain became a powerful symbol of eas­ing of Cold War tensions between the US and Soviet Union. The burger giant said its existing licensee Alexander Govor, who operates 25 restaurants in Siberia, has agreed to buy McDonald’s 850 restauran­ts and operate them under a new name. McDonald’s did not disclose the terms of the sale. McDonald’s was among the first Western brands to enter Russia in 1990. Its large, gleaming store near Pushkin Squa­re in Moscow signaled a new era of opti­mism in the wake of the Cold War shortly after the fall of the Berlin Wall. (AP/PTI)