WASHINGTON: The consequences for the global financial system if Russia cannot pay its foreign debts are likely to be “limited,” a senior IMF official said on Tuesday.
The US and its allies have imposed tough financial sanctions on Russia in retaliation for its invasion of Ukraine, but Moscow so far has made debt payments.
Still, concerns remain about its ability to continue to service its loans — especially after the May 25 expiration of a US exemption that allows the transactions.
“If there were a default, I think the direct effect on the rest of the world would be quite limited, because the numbers that we’re looking at are relatively small from a global perspective,” said Gita Gopinath, the number-two official at the Washington-based crisis lender.
“It is not a systemic risk to the global economy,” although some banks have “greater exposure,” she said in a discussion with Foreign Policy magazine.
The sanctions effectively have severed Russia’s ties to the global financial system, prohibiting most transactions except for debt payments and oil purchases.
The measures also froze the government’s stockpile of $300 billion in foreign currency reserves held abroad.