Russian default is no longer ‘improbable,’ according to the IMF chief

Kristalina Ivanova Georgieva-Kinova, the managing director of the International Monetary Fund, projected a “serious recession” in Russia as a result of “unprecedented” sanctions implemented by the West in reaction to Russia’s invasion of Ukraine, and that a Russian sovereign default is still a possibility.

Kristalina Georgieva anticipates a major recession in Russia and said that Russia defaulting is “not improbable” — but also foresees no worldwide financial disaster as a result. 

The IMF Managing Director warned in an interview with CBS News’ “Face the Nation” that Western sanctions will hurt Russia severely, reducing Russians’ real earnings and purchasing power.

“In terms of fulfilling debt commitments, I can say that we no longer think of Russian default as an improbable occurrence,” she said of a prospective default. Russia has the funds to pay its debts, but it is unable to do so.

“I can state that we no longer consider Russian default to be an unlikely prospect.” She did say, though, that Russia’s financial woes are unlikely to have substantial global financial consequences for the time being.

When asked if Russia’s weakness poses a risk of a worldwide financial disaster, Georgieva told CBS News reporter Margaret Brennan, “For the time being, no.” “If you look at total bank exposure to Russia, it’s around $120 billion.” “It’s not that I’m being careless, but it’s not that I’m being systemically relevant.”

Despite this, “the war in Ukraine has societal ramifications for many, many nations,” according to Georgieva, who cited increased oil, grain, and metal costs as examples.

Nations in Russia’s sphere of influence, such as Central Asia and the Caucasus; countries that receive Russian energy exports; and African countries that have yet to recover from the pandemic and rely on Russia and Ukraine for grain, she said, will be the hardest hit.

However, the challenges in Russia are not expected to derail the global recovery. While the IMF will “inevitably… reduce our growth predictions for 2022,” Georgieva added, “it will still be a positive growth rate,” citing “strong” economic recoveries by countries recovering the fastest from the pandemic, like the United States.

2 Responses

  1. When is Russian leadership going to learn that you don’t need to declare war on someone just because they haven’t kissed their backside.

  2. She is overreaching in thinking sanctions will hurt Russia. Hoping sanctions work is more likely the thought. China is backing Russia, as well as other key countries whom Biden is begging for oil from. US Farmers will be hurt more in increased fertilizer costs, meaning higher prices all across the market. Concrete prices will increase as we are unable to get potash. These are just a few items sanctions will hurt and Russia is not on the receiving end of them. Consumers in the West are

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