Russia Will Default, How Will It Affect the Global Economy? This is IMF Answer!

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Russia Will Default, How Will It Affect the Global Economy? This is IMF Answer!


The Managing Director of the International Monetary Fund Kristalina Georgieva said on Sunday (3/13/2022), Russia may experience default in paying its debts after unprecedented sanctions over its invasion of Ukraine. However, it will not trigger a global financial crisis.

Georgieva told CBS' "Face the Nation" program that sanctions imposed by the United States and other countries were already having a "severe" impact on the Russian economy and would trigger a deep recession there this year.

He also said war and sanctions would also have a significant spillover effect on neighboring countries that depend on Russia's energy supplies, and have resulted in more refugee waves than was seen during the Second World War.

Russia called its actions in Ukraine a “special operation.”

Reuters reported, Georgieva continued, that the sanctions also limited Russia's ability to access its resources and pay its debts. This means that defaults are no longer seen as "impossible".


Asked whether such a default could trigger a worldwide financial crisis? He replied, "For now, no."

According to him, the bank's total exposure to Russia amounts to around US$ 120 billion, an insignificant and systemically irrelevant amount.

Asked whether Russia could access the $1.4 billion IMF emergency fund approved for Ukraine last week if Moscow won the war and appointed a new government, Georgieva said the funds were in a special account accessible only to the Ukrainian government.

An IMF official said this was referring to Ukraine's internationally recognized government.

The IMF last year blocked access to Afghan funds by the Taliban after they seized control of the government, citing a lack of clarity over the recognition of the Taliban rulers in the international community.

Georgieva last week said the IMF would lower its previous forecast for global economic growth to 4.4 percent in 2022 as a result of the war. But he said the overall trajectory remained positive.

Growth remains strong in countries like the United States which are rapidly recovering from the COVID-19 pandemic, he told CBS.


The most severe impact of the war was a spike in commodity prices and inflation. This could potentially lead to hunger and food insecurity in parts of Africa, he said.



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