IMF says, Russia may become a debt defaulter

The International Monetary Fund (IMF) said that the real possibility of Russia becoming a defaulter has arisen. If Russia becomes a defaulting country, then the economy of many other countries associated with it is also bound to come under fire. After waging war with Ukraine, its economic health has started deteriorating due to the sanctions imposed on the superpower country Russia. The fear of Russia becoming a debt defaulter is getting deeper.

Money Analysts say that Russia has enough money to pay off debt, but the sanctions imposed by the US and other Western countries. Because of them, he is no longer in a position to use his money. On February 24, Russia attacked Ukraine. Since then Western countries have imposed various sanctions on Russia. They include confiscating Russian assets and ousting Russian banks from SWIFT, the global payment system. Countries that have imposed sanctions include the United States, Britain, and member states of the European Union.

IMF Managing Director Kristalina Georgieva told US TV channel Bloomberg that sanctions have also made it difficult for Russia to exercise special drawing rights (SDRs) from the IMF.

On the other hand, rating agencies have downgraded Russia’s debt rating. In view of this, Fitch Ratings has said that now Russia is sure to be a defaulter. It has been said that there is a 71 percent chance that Russia will default this year. The probability that he will default within five years is 81 percent.

According to experts, one way in front of Russia is by credit default swap. Debt-repaying countries used this measure extensively during the 2008 financial crisis, but doubts are being raised about whether Russia will be able to repay its debt through this measure in the current situation. This is possible only when Russia gets a chance to repay its debts in rubles. But in the meantime, the value of the ruble has fallen so much against the dollar that doubts have been raised about whether the lending country and financial institutions will accept the debt repayment in the ruble. Russian President Vladimir Putin has definitely signed an order, under which the Russian government and Russian companies have been asked to pay their foreign debt in rubles.

According to experts, Russia has huge reserves of gold. After that, there is also a foreign exchange of $ 630 billion, but most of this money is stuck abroad due to sanctions. For example, the US has confiscated Russia’s gold worth $132 billion. At the same time, it has also frozen a large part of Russia’s foreign currency deposited in its banks.

According to analysts, the only thing of relief right now is that the IMF has decided to keep Russia as its member. Georgieva said that Russia has not violated any economic obligations of the IMF so far. Hence there is no ground for canceling his membership. According to experts, it is still possible for Russia to find a way to avoid debt default if it remains a member of the IMF.