Niigata, Japan, May 13 (EFE).- The finance ministers of G7 countries on Saturday agreed on the urgent need to resolve the ongoing debt crises in low and medium-income countries through international cooperation.
In a three-day meeting in Japan’s western city of Niigata, the world’s most advanced economies also decided to establish a new paradigm to diversify global supply chains and discuss the regulatory gaps in banking in light of the recent collapse of several financial entities.
The debt vulnerabilities of developing nations “should be addressed by multilateral coordination that involves all official bilateral creditors taking swiftactions to respond to requests for debt treatments,” the forum said in joint statement released on Saturday after the meeting.
The finance authorities of the Group of Seven, who were joined in the forum by representatives of the European Union, India, Indonesia and Brazil, stressed the importance of private creditors providing “debt treatments on terms at least as favorable to ensure fair burden sharing.”
At the same time the group vowed to address “data, supervisory, and regulatory gaps in the banking system,” although insisting that the global financial system was resilient due to the regulatory reforms implemented after the 2008 crisis.
The functioning of the global financial system was in focus during the meeting, especially because the US suffered two of its largest banking failures in recent history when the Silicon Valley Bank and Signature Bank collapsed in March.
Another major priority for the group is to diversify supply chains, which are “highly concentrated” in a few countries.
“Diversification of supply chains can contribute to safeguarding energy security and help us to maintain macroeconomic stability,” the statement said.
The forum welcomed the voluntary channeling of special drawing rights and additional pledged offered by Japan and France, aimed at infusing more liquidity to the global economic system, and urged more countries to contribute in order to reach the target of $100 billion.
G7, which has proposed to widen external alliances, pledged to strengthen economic cooperation and political dialog with African nations.
In an unusual step, this year the group’s chair Japan had invited several emerging economies – including African Union chair Comoros – to participate in the summit.
The approach could be driven by the group’s desire to counter China’s growing influence in Africa through investments, among other reasons.
The G7 finance delegates also discussed the need to deal with the climate crisis and its impacts on the economy in a coordinated manner.
In this context, they stressed the importance of shifting to more sustainable policies aimed at decarbonization and helping emerging economies reduce their dependence on fossil fuels. EFE