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 24 February, is struggling to fend off the attack and is running out of cash.
"We have mobilised 18.4 billion US dollars of budget support, including 9.2 billion US dollars of recent commitments in the lead up to the Petersberg meeting, to help Ukraine close its financing gap and continue ensuring the delivery of basic services to the Ukrainian people," the G7 finance ministers and central bankers said in the draft document.
Ukraine estimates it needs some $5 billion a month to keep public employees’ salaries paid and the administration working despite the daily destruction wrought by Russia.
The war has been 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.
More broadly, the G7 policymakers are wrestling with the question of how to contain inflation and increase sanctions pressure on Russia without causing recession.
More and more officials have brought up the term “stagflation” – the dreaded 1970s combination of persistent price increases coupled with economic stagnation.
“G7 central banks are closely monitoring the impact of price pressures on inflation expectations and will continue to appropriately calibrate the pace of monetary policy tightening in a data-dependent and clearly communicated manner, ensuring that inflation expectations remain well anchored, while being mindful to safeguard the recovery and limit negative cross-country spillovers,” the draft said.