JAKARTA – Indonesia’s Finance Minister Sri Mulyani Indrawati reminded all finance ministers and central bank governors of G20 member countries that the world is currently in a state of danger.
“I don’t think that it is an exaggeration to say that the world is in a state of danger,” In her opening address at the 4th Finance Ministers and Central Bank Governors (FMCBG) Meeting in Washington DC on Wednesday, as quoted from Bank Indonesia’s YouTube channel, Thursday, October 13.
Sri Mulyani said the world is now facing increasing and compounding risk, high inflation, weak growth, energy and food insecurities, climate risks, and geopolitical fragmentation.
“The war in Ukraine continues to exacerbate the global food security and nutrition crisis with high and volatile energy, food, and fertilizer prices, restrictive trade policies, and supply chain disruption,” Sri said.
This situation is made worse as countries around the world are still recovering from the impact of the Covid-19 pandemic. Amidst a fragile recovery, countries around the globe world are also faced by climate change which has made food prices soar.
The war in Ukraine, Sri said, has worsened the situation because energy supply was cut off, resulting in crisis. This increasingly low supply have sent energy prices soaring, threatening the energy security of many countries.
“Energy price shocks have affected most countries. But developing countries, especially energy-importing countries face the highest burden,” she said.
Because of all the risks, the minister added, the world has seen “faster than anticipated global monetary policy tightening” with many nations raising their interest rates significantly, which created “spillover risks across the world”.
Sri Mulyani said that war, surging commodity prices, increased global inflation and interest rate, and tightening liquidity have increased the risk of debt distress, not only in low-income countries, but also and middle-income and even advanced economies.