IMF head says Russian default no longer an ‘improbable event’

Though it’s unlikely to trigger a global financial crisis, International Monetary Fund Managing Director Kristalina Georgieva said.
Kristalina Georgieva Photographer: Emily Macinnes/Bloomberg

A Russian sovereign default is no longer improbable, though it’s unlikely to trigger a global financial crisis, International Monetary Fund Managing Director Kristalina Georgieva said.

With Russia and Russian banks under sanctions by the US and its allies after the full-scale invasion of Ukraine, Russia’s credit rating has faced downgrades. Fitch Ratings said last week that a bond default is “imminent” as a result of measures imposed since the war in Ukraine began on February 24.

“In terms of servicing debt obligations, I can say that no longer we think of Russian default as improbable event,” Georgieva said on CBS’s “Face the Nation” on Sunday. “Russia has the money to service its debt, but cannot access it.”

Asked whether Russia’s financial squeeze risks causing a world financial crisis, the IMF head said, “For now, no.” Banks’ global exposure to Russia is “definitely not systemically relevant,” she said.

While the IMF will “inevitably” downgrade its growth outlook for 2022, “it is still going to be a positive growth rate,” Georgieva said.

© 2022 Bloomberg

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