Russia Potentially Defaults, IMF: Will Not Trigger Global Financial Crisis

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WASHINGTON - Various parties have estimated that with a series of sanctions that have been received, Russia has the potential to experience default.

However, the International Monetary Fund (IMF) is still quite optimistic and believes that this condition will not trigger a global financial crisis.

"For now, no (there is a potential for a global financial crisis", said IMF Managing Director, Kristalina Georgieva, in the Face The Nation program on CBS, Sunday, March 13.

According to Georgieva, a series of economic sanctions from the United States (US) and its allies will indeed have a very severe impact on Russia's domestic economy. In fact, it is possible, it will trigger a recession in the Red Bear Country.

Not only that but the derivative impact of sanctions will also be felt significantly by neighboring countries whose energy needs have depended on supplies from Russia. In addition, the wave of refugees from Russia is also believed to be causing its own problems, which are expected to be more crucial than during World War II.

On the other hand, sanctions prohibiting exports and imports from and to Russia will also limit the space for the Putin government to monetize the existence of its natural resources. Meanwhile, the exposure of banks to Russia is now estimated to have reached 120 billion US dollars.

However, again, the IMF said Georgieva still believes that these conditions will not be able to encourage the emergence of a wider systemic impact. "(Current condition) is irrelevant (to be considered as a trigger for systemic impact)", said Georgieva.

Meanwhile, Georgieva also received questions about the possibility of Russia's access to an emergency fund of US$1.4 billion from the IMF if Russia later won the battle and succeeded in controlling Ukraine.

The question arises because last week Ukraine was also approved to receive emergency funds from the IMF so Russia is also considered by some to have the same rights. "The (emergency) funds are in a special account that can only be accessed by the Ukrainian government, in this case, the internationally recognized Ukrainian government (not the government formed by Russia, if it succeeds in controlling Ukraine", said Georgieva.