The International Monetary Fund (IMF) suggested this Thursday the possibility that Russia goes bankrupt because of the economic sanctions imposed by the rest of the countries for its invasion of Ukraine, and warned that the Russian economy is already contracting and heading into a deep recession.
“Russia’s bankruptcy is no longer an unlikely event”said the managing director of the Fund, Kristalina Georgieva, in a digital meeting with journalists to discuss the financial implications of the war in Ukraine.
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Georgieva pointed out that what will determine how strong the recession in Russia will be will be the duration of the war and the sanctions, as well as the possibility that they will become more severe and affect energy exports.
The managing director of the Fund explained that the entity’s office in Moscow is closed, thate The IMF does not currently have any ongoing operations with Russia and that the reserve funds that Russia has in the organization are practically inaccessible to the country precisely because of the sanctions imposed by other countries.
Regarding a hypothetical expulsion of Russia from the IMF, Georgieva explained that the only way contemplated by the statutes of the institution to to expel a member is the violation of their financial obligations, something that the Russians have not done to date and that is therefore a scenario that the Fund does not contemplate.
The Fund held this meeting one day after its executive board approved the disbursement of $1.4 billion in emergency aid to Ukraineand warned that the war will cause a “deep recession” in the country.
The amount approved by the Fund matches that requested by the Ukrainian government, and will serve to “mitigate the economic impact” of the war started by Russia, the IMF said on Wednesday in a statement in which Georgieva admitted that the financing needs of Ukraine are “big, urgent” and can grow.