IMF suggests Russia could be bankrupted by sanctions

The International Monetary Fund (IMF) today suggested the possibility that Russia will go 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 is headed for a deep recession.

“Russia’s bankruptcy is no longer unlikely,” said the Fund’s managing director, Kristalina Georgieva, in a digital meeting with journalists to discuss the financial implications of the war in Ukraine.

Georgieva pointed out that what will determine how strong the recession in Russia will be the duration of the war and of the sanctions, as well as the possibility that these become more severe and affect energy exports.

The managing director of the Fund explained that its office in Moscow is closed, that 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 sanctions from 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 expel a member is the violation of its financial obligations, something that the Russians have not done to date and therefore this is a scenario that is not contemplated.

The Fund held this meeting the day after its executive board approved the disbursement of 1.4 billion dollars in emergency aid to Ukraine, and 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.

With information from EFE and Swissinfo.