Russian default possible, but not expected to trigger a global financial crisis: IMF

• International Monetary Fund Managing Director Kristalina Georgieva says Russia may default on its debts, but it would not trigger a global financial crisis
• The total exposure of banks to Russia is about $120 billion, whilst significant it is not considered to be relevant
• Georgieva warned of potential consequences which go beyond Ukraine and Russia, which include more inflation, higher commodities, and a food crisis in Africa
• Last week, the IMF approved $1.4 billion in emergency funding for Ukraine, which Russia won’t be able to access in the case they take Ukraine

International Monetary Fund Managing Director Kristalina Georgieva said Russia may default on its debts, but it would not trigger a global financial crisis.

Increased sanctions from western countries have crippled the Russian economy and increased its risk of default after invading Ukraine.

The total exposure of banks to Russia is about $120 billion, whilst significant it is not considered to be relevant.

However, despite believing a global recession would not occur, Georgieva informed CBS’s Face the Nation program on Sunday of her concern for consequences that go beyond Ukraine and Russia.

“Beyond the immediate neighbors, there are two groups of countries we are very worried,” she said

“The first group are countries that have yet to recover from the COVID-induced economic crisis. For them, this shock is particularly painful.

“And the second group of countries are those that are more dependent on energy imports from Russia, because there the impact on consumption, but also on inflation is going to be more prominent.”

She warned the IMF would likely downgrade its growth projections for 2022, but predicts it will still remain positive.

Ms Georgieva expects inflation and commodity prices to be driven higher, as well as the potential for a food crisis to occur in Africa.

Last week, the IMF approved $1.4 billion in emergency funding for Ukraine. However, if Russia were to take over Ukraine, they would not be able to access this funding.