G7 Finance Leaders Issue Niigata Communiqué

We, the G7 Finance Ministers and Central Bank Governors, met in Niigata, joined by the Heads of the International Monetary Fund, World Bank Group, Organisation for Economic Cooperation and Development, and Financial Stability Board.

We were honored to be joined virtually by the Ukrainian Finance Minister Sergii Marchenko. We reaffirmed our strong commitment to our united response to Russia´s war of aggression against Ukraine, which is also an attack on the rule of law and the principles of the UN Charter, and to our unwavering support for Ukraine for as long as it takes.

In the face of multiple and complex global challenges, we renewed our commitment to upholding the free, fair and rules-based multilateral system and elevated our engagement with international partners to new heights through an extensive dialogue to advance international cooperation and deliver prosperity for all. We highly valued the productive dialogue with Brazil, Comoros, India, Indonesia, the Republic of Korea, and Singapore. G7 members and Finance Ministers of these countries exchanged views on recent global economic developments and major challenges to foster robust and sustainable growth, and committed to jointly tackle a range of global economic challenges, fight poverty, and achieve strong, sustainable, balanced, and inclusive global growth.

I. Tackling Immediate Global Challenges

Russia's War of Aggression against Ukraine and Support for Ukraine

1. We reiterate our unwavering support for Ukraine for as long as it takes and are united in our condemnation of Russia's illegal, unjustifiable, and unprovoked war of aggression against Ukraine. Russia's war has caused tragic loss of life, destruction of property and infrastructure, and exacerbated global economic challenges, including through adding to inflationary pressures, disrupting supply chains, and heightening energy and food insecurity. We remain determined to foster international cooperation to address the global economic hardships caused by Russia's war and its weaponization of food and energy, which are disproportionately felt by low- and middle-income countries and vulnerable groups. In this context, we steadfastly reject Russia's repeated false narrative about the spillover effects of our sanctions on food and energy security. We call for an immediate end of Russia's illegal war against Ukraine, which would clear one of the biggest uncertainties over the global economic outlook.
2. We are strongly committed to continue addressing Ukraine's urgent short-term financing needs, as well as supporting its neighboring and other severely affected countries. We, together with the international community, have increased our commitment of budget and economic support for Ukraine for 2023 and early 2024 to 44 billion US dollars, which enabled the approval of an International Monetary Fund (IMF) program for Ukraine amounting to 15.6 billion US dollars over 4 years. These supports give Ukraine certainty and enable its authorities to safeguard the functioning of government, continue the delivery of basic services, carry out the most critical repairs of damaged infrastructure and stabilize the economy. We look forward to swift implementation of structural reforms by Ukraine under the IMF-supported program, and the successful completion of the program's reviews, which will promote macroeconomic and financial stabilization, enhance governance and strengthen institutions, contribute to longer-term economic sustainability and post-war reconstruction. This will also help to catalyze further financial support from other countries and institutions as well as the private sector.
3. We will continue our joint efforts to support Ukraine's repair of its critical infrastructure, recovery and reconstruction, including through the Multi-agency Donor Coordination Platform. We welcome continued engagement by the IMF, the World Bank Group (WBG), the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank. Given the substantial recovery and reconstruction financing needs, we should expand the donor base. Mobilizing private capital is also crucial. In this context, we welcome ongoing efforts to catalyze private resources through providing guarantees and insurance, including by the International Finance Corporation and the Multilateral Investment Guarantee Agency. We recognize the role of Development Finance Institutions (DFIs) to catalyze private investments and welcome the launch of the Ukraine Investment Platform in Tokyo on 12 May, to support Ukraine and affected countries more broadly, through further efficient co-financing and greater collaboration among the DFIs, together with the EBRD as the leading institution. We look forward to the Ukraine Reconstruction Conference to be held in London in June.
4. We reiterate our unwavering resolve to impose and enforce sanctions and other economic measures to further undermine Russia's capacity to wage its illegal, unjustifiable and unprovoked war of aggression. We remain committed to countering any attempts to evade and undermine our sanction measures. Following our Leaders' statement on 24 February, as part of our efforts to strengthen the enforcement of our sanctions and other economic measures, we have initiated sharing typologies of circumvention and evasion and other relevant information through the Enforcement Coordination Mechanism (ECM). Going forward, we will continue to strengthen coordination in monitoring cross-border transactions between Russia and other countries, take further action directed at the Russian financial sector as necessary, and closely monitor the effectiveness of the price caps on Russian crude oil and petroleum products to ensure the measure delivers on its objectives, and take any necessary and appropriate enforcement actions required. We call on other countries to join our measures against Russia and efforts to bolster their enforcement. We will also ensure Russia's sovereign assets in our jurisdictions remain immobilized in accordance with our Leaders' statement on 24 February.

Global Economy and Economic Policy

5. The global economy has shown resilience against multiple shocks including the COVID-19 pandemic, Russia's war of aggression against Ukraine, and associated inflationary pressures. Nevertheless, we need to remain vigilant and stay agile and flexible in our macroeconomic policy amid heightened uncertainty about the global economic outlook.
6. We are committed to a stability- and growth-oriented macroeconomic policy mix that supports medium-term fiscal sustainability and price stability.
   • Fiscal policy should continue to provide, as appropriate, temporary and targeted support to vulnerable groups suffering from the increase in cost of living and catalyze investment needed for the green and digital transformations. The overall fiscal stance should ensure medium-term sustainability and be coherent with the monetary policy stance amid inflationary pressures.
   • Inflation remains elevated and central banks remain strongly committed to achieving price stability, in line with their respective mandates. They will ensure inflation expectations remain well anchored and will clearly communicate policy stances to help limit negative cross-country spillovers.
   • We reaffirm our May 2017 exchange rate commitments.
   • We reemphasize the importance of supply-side reforms, especially those that increase labor supply and enhance productivity. We also stress the crucial role of women and under-represented groups for the long-term success of our economies through promoting inclusion, diversity and innovation. We look forward to a successful review of the G20/Organisation for Economic Cooperation and Development (OECD) Principles of Corporate Governance to strengthen sustainability and resilience of the private sector.
7. We will continue to work closely with supervisory and regulatory authorities to monitor financial sector developments and stand ready to take appropriate actions to maintain financial stability and the resilience of the global financial system. We reaffirm that our financial system is resilient, supported by the financial regulatory reforms implemented after the 2008 global financial crisis, including considerable increases in the levels of bank capital and liquidity, an international framework for effectively resolving failing institutions, and strengthened cross-border regulatory and supervisory cooperation. We will address data, supervisory, and regulatory gaps in the banking system. We support the Financial Stability Board (FSB)'s ongoing efforts, including for bank prudential and resolution frameworks, to draw out lessons learned from the recent episodes and the consequent priorities for its future work to enhance financial stability. We also continue to prioritize addressing vulnerabilities in non-bank financial intermediation (NBFI). We strongly support the work of the FSB and standard-setting bodies (SSBs) on enhancing the resilience of NBFI, including promoting implementation of the FSB Money Market Fund policy proposals, addressing structural liquidity mismatches in open-ended funds, addressing vulnerabilities in NBFI leverage, and enhancing margining practices in centrally and non-centrally cleared markets.

Supporting Vulnerable Countries

8. We reiterate the urgency of addressing debt vulnerabilities in low- and middle-income countries amid multiple economic shocks that have disproportionally impacted these countries. We fully support the G20's effort to improve the implementation of the "Common Framework" in a predictable, timely, orderly and coordinated manner, providing clarity to participants. We call for a swift conclusion of debt treatment for Zambia and encourage progress on a debt treatment for Ethiopia under an envisaged IMF-supported program. We welcome the progress toward the IMF-supported program for Ghana through the recently provided financing assurances. Beyond the "Common Framework," debt vulnerabilities in middle income countries (MICs) should be addressed by multilateral coordination that involves all official bilateral creditors taking swift actions to respond to requests for debt treatments. In this respect, we welcome the launch of the creditors' meeting for Sri Lanka under the three co-chairs, France (as chair of the Paris Club), India, and Japan, and look forward to a swift resolution as a successful model for future multilateral efforts to address MICs' debt issues. We also stress the importance for private creditors to provide debt treatments on terms at least as favorable to ensure fair burden sharing in line with the comparability of treatment principle. In this context, the contractual approach, including private creditor incorporating Majority Voting Provisions in future syndicated loan contracts, can facilitate sovereign debt restructuring. We expect the Global Sovereign Debt Roundtable led by the IMF, the WBG, and India (holding the G20 Presidency) to facilitate constructive dialogue among debtors and official and private creditors and look forward to further work to support predictability and efficiency of the debt restructuring process.
9. Enhancing debt data accuracy and transparency is crucial to secure credible and effective debt sustainability assessments. In support of the G20's initiative on debt data transparency, we, together with willing other creditors, took the lead through a first data sharing exercise by providing granular lending data to the WBG for debt data reconciliation. We are encouraged by the outcome of this exercise, which initially identified data gaps amounting to 6.5 billion US dollars in total. With these tangible benefits in mind, we invite all official bilateral creditors to join the data sharing exercise for debt data reconciliation, including through further advancing the G20's initiative in the area of debt data accuracy. We call on private creditors to voluntarily submit details of their lending to the joint Institute of International Finance / OECD Data Repository Portal.
10. We strongly support the ongoing work on the evolution of the Multilateral Development Banks (MDBs). We encourage MDBs to expedite the work to review and transform their business models to better address transboundary challenges such as climate change, pandemics, fragility and conflict, which are integral to achieving poverty reduction and shared prosperity. This evolution should come with the most efficient use of their existing capital. To this end, we will contribute to developing an ambitious G20 Roadmap on implementing the recommendations of the G20 MDB Capital Adequacy Framework Review and call on MDBs to make further progress in a comprehensive manner while safeguarding MDBs' long-term financial sustainability, robust credit ratings and preferred creditor status. We welcome the ongoing discussion at the WBG to review its vision and mission, operating model, and financial capacity, including the first proposal of financial reform that can add up to 50 billion US dollars of financing capacity over the coming decade. We look forward to further progress at the WBG toward the 2023 WBG and IMF Annual Meetings and beyond so that ambitious reforms can be made on a continual basis and encourage other MDBs to join this initiative for a coordinated approach of MDBs as a system. In considering the renewed value proposition for MDBs to address global challenges, we emphasize the importance of a targeted, more systemic approach and maintaining prioritization on low-income countries (LICs). We also call on MDBs to make the best use of policy and knowledge support, building on their longstanding experience, align their analytical strengths with evolving missions, and explore strengthened approaches to promote mobilizing domestic resources and private capital as well as private sector engagement.