Minister of Finance: Global energy crisis threatens macroeconomic stability

Jakarta – The global energy crisis poses a threat to global macroeconomic stability, Finance Minister Sri Mulyani Indrawati at the opening of the 3rd Finance Minister and Central Bank Governors (FMCBG) at the Bali International Convention Center, Friday (15/7).

The energy crisis has major political and social implications as it did in Sri Lanka, Ghana, Peru, Ecuador and other places. This condition is believed to worsen economic recovery efforts.

“I believe that all of you as finance ministers as well as central bank governors see this as a threat to our macroeconomic stability and a (threat to the) conducive environment for us to maintain our recovery,” said Indrawati.

Furthermore, she said that world oil prices have increased by 350 percent in two years, from April 2020 to April 2022. Indrawati said, at the beginning of the pandemic, the world crude oil prices were close to zero or even minus “and now we are facing a very different extreme situation. This 350 percent increase is the largest increase for a two-year period since the 1970s”.

This has an impact on rising energy prices in all countries in the world. She said in June, natural gas prices in Europe increased by 60 percent in just two weeks and fuel shortages are ongoing around the world.

With this increase in energy commodities, the Minister of Finance said this had an impact on socio-political conditions in several countries. Thus, globally, this will threaten economic recovery efforts.

On the other hand, the state treasurer said that the price increase also occurred in the world food sector. A wider impact on food insecurity that affects millions of people, said Indrawati adding that “there is an urgency that the food crisis must be addressed. The immediate deployment of all available financing mechanisms is necessary to save lives and strengthen financial and social stability”.

According to the World Food Programme, the number of people facing acute food insecurity has more than doubled since 2019 before the pandemic from 135 million to 276 million. (Hartatik)

Banner photo: Minister of Finance Sri Mulyani Indrawati opened the 3rd Finance Minister and Central Bank Governors (FMCBG) hybrid event at the Bali International Convention Center, Friday (15/7). (Photo: Hartatik)

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