(Bloomberg) -- The world’s most powerful finance ministers and central bank chiefs are gathering this week, with the one-year anniversary of Russia’s invasion of Ukraine — and its impacts on the global economy — looming over an agenda focused on the risks of debt distress and fighting inflation.  

Group of 20 officials are meeting in India’s technology hub Bengaluru as consumer prices in most countries are still uncomfortably high and the war in Europe grinds on. China’s post-Covid reopening stands out as a bright spot for the global economic outlook, while some hard conversations are expected over Beijing’s emergence as the biggest creditor to emerging markets and its role in long-sought debt restructurings.

Read More: ‘Lost Decade’ Looms as US-China Face Off Over Debt Relief

Splits over how to respond to Russia’s war in Ukraine has meant many G-20 finance chief meetings over the past year ended without an official communiqué, the traditional consensus statement, although last year’s host Indonesia was able to wrangle an agreement in November to cap off the final leaders meeting. Officials in India this week are going so far as trying to avoid using the word “war” in any joint statement, seeking to avoid letting the conflict overshadow other issues.

India, which is promoting a broad theme around the rise of the Global South, is also dealing with the fallout of accusations of fraud and stock manipulation against the Adani Group, whose billionaire founder is seen as close to Prime Minister Narendra Modi. The troubles facing Gautam Adani’s empire are creating an uncomfortable political moment, particularly as the company has referred to the allegations as an “attack on India.”

While the Adani episode has raised corporate governance questions more broadly about India, Bloomberg Economics analysis shows the company’s “poor governance, liquidity and leverage conditions are outliers among the country’s large businesses,” and that firms more generally will benefit from India outperforming the global economy.

Here are the other main issues to watch:

Debt Management

Tense discussions around whether and how to offer debt relief to several markets in distress will headline the agenda, with risk of a “lost decade” rising for some nations as talks drag on. 

About 60% of low-income countries are already in or at high risk of debt distress, according to International Monetary Fund data, and India is the only bright spot in the region with neighboring countries Pakistan, Sri Lanka and Bangladesh all seeking IMF support.

The G-20’s blueprint for restructuring poor countries’ loans, known as the Common Framework, has seen disagreements between the traditional Paris Club lender nations and China. While India and the Paris Club are willing to forgive a certain amount of debt, China is only offering to extend the repayment schedule.

The discussion has turned political, with the US, India and others pressuring China to take a haircut on loans to poor nations. 

“China has certain modalities in place and the West, through the Paris Club, have certain modalities in place — and they’re not converging,” Taimur Baig, DBS Bank Ltd. chief economist, told Bloomberg Radio Tuesday.

“But I think it’s a bit of a game of chicken. It’ll work out,” even if not this week, said Baig, a former IMF economist.


Federal Reserve officials have continued to remind the world every few days of their near-unanimous view that price growth is still “much too high.” And they’re not alone: central bankers worldwide started the year with expectations of more interest-rate hikes, and many are now seeing higher-than-anticipated inflation reports that delay plans to ease their policy tightenings.

Count India, Australia, Norway, Mexico and Sweden among those that recently cited hotter prices pushing them to stay vigilant with rate hikes. Officials must balance that battle with trying to minimize the hit to economic growth amid a still-fragile global outlook.  

The balance is particularly sensitive for India, which has multiple state elections this year before the national vote in 2024. January inflation came in at 6.52%, climbing above the central bank’s target ceiling. Wary of the pitfalls of high prices for the economy as well as for elections, Modi’s government avoided announcing a populist budget earlier this month.

At last year’s confab of the finance titans in Bali, Indonesia, IMF Managing Director Kristalina Georgieva warned that governments could be making things more difficult for central bankers by overdoing fiscal stimulus, which can exacerbate inflation.

Those tensions between governments and central banks have played out since then, with Brazil, Turkey, Indonesia, and the Philippines all recently tackling that balance and questions around central bank independence. 

Crypto, Digital Finance

India has been calling for a global standardized approach on dealing with cryptocurrencies, a point that has also been stressed by the IMF. India doesn’t ban trading in crypto assets, it introduced a harsh tax rate last year, virtually choking the activity. Meanwhile, Hong Kong is quietly getting a nod from Beijing for its own crypto ambitions.

For at least the past few years, fresh cross-border payments systems have been cropping up among pairs of countries as governments push digitization and financial inclusion. India has been particularly vocal on this front, and just this week launched a real-time money transfer facility with Singapore. 

That’s also raised questions on taxation across borders and in the digital space. Looming over the discussions is the global tax deal notched among more than 130 countries in 2021 on levies for multinational firms, which has yet to be fully enacted by members and could be unevenly implemented. One item that India wants to bring to this agenda: how to tax profits of software companies working in different countries. 

Climate Finance

India and other developing nations will also raise their long-standing demand of higher climate finance from the developed nations. Amitabh Kant, the sherpa for India during its presidency of the G-20 this year, has said that multilateral development bank reforms — an issue pushed by US Treasury Secretary Janet Yellen — need to include a redesign of funding mechanisms, and include more blended finance. 

Increasing share of climate finance as loans instead of grants is pushing developing countries into more debt, India’s Environment Minister Bhupender Yadav said at the G-20 environmental and climate ministerial meeting in Bali in August. While India has set a carbon net-zero target of 2070, the country along with other emerging markets wants rich nations to pay more for the green-energy transition.

As meeting participants discuss how to get the private sector more involved in climate finance, talks might also turn to so-called debt-for-nature swaps, and whether investors are better advised to keep conservation efforts out of debt deals. 

--With assistance from Anup Roy, Suvashree Ghosh, Sheryl Tian Tong Lee, Shawn Donnan, Yoshiaki Nohara and Janet Paskin.

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