Head of delegates prepare for a meeting on the last day of the G20 finance ministers and central bank governors meeting in Jakarta, Indonesia, February 18, 2022. Mast Irham / Pool via REUTERS
Head of delegates prepare for a meeting on the last day of the G20 finance ministers and central bank governors meeting in Jakarta, Indonesia, February 18, 2022. Mast Irham / Pool via REUTERS Reuters / POOL

Finance leaders from the Group of 20 major economies were set on Friday to agree that rising inflation and geopolitical risks could threaten a fragile global recovery, as the crisis in Ukraine and the COVID-19 pandemic's fallout cloud the outlook.

But a draft final communique seen by Reuters contained no direct mention of Western concerns that Russia might invade Ukraine, with one source at the talks saying even a reference to "current" tensions had been vetoed by Russia and China.

In a draft text seen by Reuters, the finance chiefs from the world's leading economies pledged to use "all available policy tools to address the impacts of the pandemic," while warning that future policy space was likely to be "narrower and uneven."

Inflation is currently elevated in many countries due to supply disruptions, a mismatch in supply and demand, as well as rising commodity and energy costs, the draft communique said.

It further noted the G20 would continue to "monitor major global risks, including from geopolitical tensions that are arising".

That differed from an earlier version which included the word "current" in brackets - a device used by communique-drafters for language that still needed to gain consensus.

The talks were held both virtually and in Jakarta and G20 finance leaders intend to issue the final communique after their meeting ends on Friday.

The diverging pace of recovery from the pandemic is complicating the policy path for central banks. Expected steady interest rate hikes by the U.S. Federal Reserve have drawn attention to the potential fallout for emerging markets.

While cases of the Omicron variant of COVID-19 are receding in many wealthy countries, they are still rising in many developing nations including host country Indonesia.

The G20 finance leaders are expected to voice support for ensuring timely and affordable access to COVID-19 vaccines, therapeutics, diagnostics and other medical supplies for low- and middle-income countries, according to the draft communique.