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Putin comments on risks for global economy

July 07, 21:11 UTC+3

Russian President Vladimir Putin paid attention to possible risks for global economy due to growing sovereign debt of developed countries at the G20 summit

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© Sergei Konkov/TASS

HAMBURG, July 7. /TASS/. Russian President Vladimir Putin paid attention to possible risks for global economy due to growing sovereign debt of developed countries at the G20 summit, Finance Minister Anton Siluanov told reporters on Friday.

"Speaking about the debt, these countries with developed economy accumulated a huge debt. If you recall Maastricht Agreements, the need not to exceed 60% of GDP for the sovereign debt level was mentioned. It is about 100% now in developed economies. Certainly, the Russian President invited attention to the point that when rates are rising, debt issues will also emerge as a risk to sustainable economic growth. Russia appears to be very successful in this regard," Siluanov said.

Developed economies will start toughening of monetary policy, including rates’ increase by central banks, the minister said. "Growth has currently surfaced in developed economies. Many risks are in place, related to inflation growth start and low unemployment level. To all appearances, toughening may start soon and certain countries have already initiated more stringent monetary policy and increase of rates," Siluanov added.

IMF quotas 

The formula for calculation of International Monetary Fund (IMF) quotas determining the amount of borrowings for IMF members is planned for revision at the turn of 2019, Russian Finance Minister Anton Siluanov told reporters on Friday.

"The need to revise IMF quotas was discussed. It will be done at the turn of 2019. Three last reporting periods will be taken to this end and required calculations will be completed," Siluanov said.

BRICS countries agreed that the share of developing economies should grow significantly within the framework of the new quotas revision, the minister said. "BRICS countries noted that the promise to revise quotas should be fulfilled without any postponements, to increase the share of developing countries in the global economy," Siluanov added.

The IMF sets a quota calculated on the basis of the overall position of the country in the world economy for each member-state. The quota determines the maximum amount of contributions to IMF and financing volume the member-state can expect.

 

Protectionism in global trade

Protectionism in global trade, effected by the largest global economy in the first instance, may lead to bubbles and overheating, he went on. 

"Economic crises should be prevented by comprehensive financial regulation. Every country should adhere to certain principles. If we say the largest country of the world economy does not follow them, then there will be a risk of bubbles and that the global economy may again face overheating and grounds for new crisis phenomena at a certain moment of time," Siluanov said.

Russia’s partners in G20 are confident that protectionism is a major downside for the global economy and that joint decisions should be made along with stimulation of world’s economic growth, he said.

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