Advanced nations must take responsibility for global spillover: Sitharaman

Cautioning the West against imposing sanctions on countries, Nirmala Sitharaman said in the near-term, advanced nations must take responsibility for the "global spillover" of their policy decisions

Cautioning the West against imposing sanctions on countries, Union Finance Minister Nirmala Sitharaman on Tuesday said in the near-term, advanced nations must take responsibility for the "global spillover" of their political and economic policy decisions.

Sitharaman arrived here earlier in the day to attend the annual meetings of the International Monetary Fund (IMF) and the World Bank. The finance minister during her five-day visit will also hold a bilateral meeting with US Treasury Secretary Janet Yellen.

"That international cooperation is needed more than ever is to state the obvious," she said in her prepared speech at the Brookings Institute think-tank.

In the near-term, advanced nations must take responsibility for the global spillover of their political and economic policy decisions and put in place safety nets rather than impose sanctions on nations who are merely fulfilling their moral and democratic obligations for their people, Sitharaman said.

Sitharaman's remarks assume significance in the wake of the push by the US-led western countries to reduce its oil purchase from Russia and even warning other nations of sanctions if they continued to do so.

In the medium-term, promises made in good times to provide finances to developing countries for dealing with climate change, energy transition and deliver on their commitments to net-zero must be redeemed, she said.

Even as the world is coping with the coronavirus pandemic, it has to deal with the consequences of the conflict In Europe, the finance minister said.

Inflation has proven to be anything but transient. Unprecedented quantitative easing and fiscal expansion is making way for quantitative tightening and fiscal retrenchment.

Extreme policies beget extreme market reactions. In turn, systemic vulnerabilities built up and hidden during good times stand exposed. But, the consequences are faced by nations that had nothing to do with such policies, Sitharaman said.