“However, our budget bears a very large subsidy for fuel,” Sri Mulyani noted during the 2022 G20 Indonesia side activity titled “Sustainable Finance for Climate Transition Roundtable” here on Thursday.
The G20 is an international forum comprising 19 countries and the European Union that work together to handle major issues. Indonesia is holding the G20 Presidency this year.
Sri Mulyani pointed out that in countries unable to provide subsidies, the risk of rising fuel prices is passed on to the public. As a result, inflation in several countries rose sharply, thereby pushing them to the brink of recession.
Hence, the minister views the challenge of dealing with inflation as one of the most important agendas to be discussed at the G20 Finance Ministers and Central Bank Governors meeting on July 15-16, 2022, in Jakarta.
The meeting of finance ministers and central bank governors is the third time before the G20 summit in November 2022 in Bali, Indonesia.
In the midst of economic recovery efforts due to the COVID-19 pandemic, the global community is currently faced with the geopolitical issue of the Russia-Ukraine war as well as soaring inflation in several countries.
Sri Mulyani stated that Russia was the world’s second-largest supplier of crude oil, so when it got involved in a war, the global oil prices immediately spiked and caused an energy crisis everywhere.
The same was observed in the case of Ukraine that has an important role in global trade as the world’s largest suppliers of wheat.
“Hence, the most prominent impact (of the war between the two countries) is the energy and food crisis,” Sri Mulyani stated.
The minister noted that the war also resulted in an increase in the global prices of commodities, such as coal, bauxite, nickel, and palm oil.