G20 FMCBG meet at Gandhinagar | India 'indispensable partner' for friend-shoring, says U.S. Treasury Secretary Janet Yellen

Ms. Yellen highlighted four priorities that she plans to work on this week with the Finance Ministers from G20 nations here in Gujarat

July 16, 2023 01:16 pm | Updated 03:56 pm IST - Gandhinagar

U.S. Treasury Secretary Janet Yellen addresses a news conference during a G20 Finance Ministers’ and Central Bank governors’ meeting at Gandhinagar, Gujarat on July 16, 2023.

U.S. Treasury Secretary Janet Yellen addresses a news conference during a G20 Finance Ministers’ and Central Bank governors’ meeting at Gandhinagar, Gujarat on July 16, 2023. | Photo Credit: Reuters

United States Secretary of the Treasury Janet Yellen on July 16 said the U.S. sees India as an “indispensable partner” for ‘friend-shoring’ and she hopes to use her visit here to deepen what is already a significant relationship in that respect.

Derisking and friend-shoring are important priorities for the U.S. and something that it is promoting in India, Ms. Yellen told reporters ahead of her meeting with Finance Ministers from G20 nations here in Gujarat.

Friend-shoring is a strategy where a country sources raw materials, components and even manufactured goods from countries that share its values.

Also read: Analysis | World trade boom keeps de-globalisation at bay

Ms. Yellen said, “Friend-shoring is an important foundation of our approach to increasing resilience of our supply chains, and we see India as an indispensable partner in that and I hope to use this trip to deepen what is already a significant relationship with respect to friend-shoring that the U.S. and India have." The U.S.-India bilateral ties have reached an all-time high, and the two countries are looking to see it grow even more, she said.

The private sector is a really important point of friend-shoring, and private firms have continued to make announcements of investing in India as they see India as “an excellent place to be producing and exporting to the U.S.,” she said.

Ms. Yellen highlighted four priorities that she plans to work on this week: debt distress in emerging markets and developing countries, multilateral development bank evolution, support for Ukraine, and global tax deal.

Debt vulnerabilities for many countries have mounted as a result of the pandemic and Russia's "illegal" war against Ukraine, with the share of countries in debt distress doubling compared to 2015, she said.

Also read | India biggest trading partner for U.S., says Treasury Secretary Janet Yellen

“Restoring debt sustainability can help unlock the massive economic potential of developing nations. It can help them regain lost growth and development and enable them to make investments to address challenges that we are trying to tackle together,” she said.

When these countries develop and contribute to the global economy, "all of us benefit," Ms. Yellen said.

She said the U.S. Treasury is ready to serve as a partner for the International Monetary Fund's (IMF) Poverty Reduction and Growth Trust — the PRGT — which needs to be put on more financially sustainable footing.

“I expect the IMF to develop a set of options to do so. My team at Treasury is ready to serve as a partner for the IMF as it considers the options at its disposal – like using the internally generated resources of the fund to support the PRGT subsidy account,” she said.

The U.S. will continue to build momentum for a collective initiative to evolve the multilateral development banks (MDBs), Ms. Yellen said.

“Our reforms to the World Bank's balance sheet will responsibly unlock as much as $50 billion in additional lending capacity over the next decade. As part of our evolution agenda, we estimate that the MDBs as a system could unlock $200 billion over the next decade just from the measures already being implemented or under deliberation,” she said.

There is potential for even more if the MDBs undertake some of the longer-term and more complex recommendations in the G20 Capital Adequacy Framework report, she said.

“This is $200 billion more in funding that we can use to advance key global priorities: spurring economic growth and reducing poverty, fighting climate change, and promoting human development,” she said.

“As we take these actions, we recognise that public financing alone cannot fully deliver on the massive challenges that face us. That's why it is essential that development banks ramp up their private capital mobilization rates,” she said.

Another key priority this week is to redouble support for Ukraine as it continues to defend itself against Russia's “illegal and unprovoked attack,” Ms. Yellen said.

“Let me be clear: our coalition's support for Ukraine is unequivocal. The United States will stand with Ukraine for as long as it takes. And I know the allies and partners in our coalition will do so as well,” she said.

“We will also continue to cut off Russia's access to the military equipment and technologies that it needs to wage war against Ukraine. One of our core goals this year is to combat Russia's efforts to evade our sanctions. Our coalition is building on the actions we've taken in recent months to crack down on these efforts,” she added.

Talking about the work to make the international tax system fairer and fit for purpose in the 21st century, Ms. Yellen said today many countries are moving forward to implement the global minimum tax on the earnings of large multinationals, which will end the race to the bottom on corporate tax rates.

“It will enable our government and others to implement tax systems that ensure multinationals pay their fair share and compete on a level playing field with small businesses. We continue to work together in the inclusive framework to ensure consistent implementation and we expect additional published guidance soon,” she said.

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