Gita Gopinath

By Sonal Nain, 7 Mar 2022

Gita Gopinath, the first deputy managing director of the International Monetary Fund, spoke at the We The Women Townhall about the economic consequences of the Ukraine-Russia war. Gopinath expressed deep concerns over the Ukraine crisis, “It is just tragic that people are affected by the war.”

Gopinath said that the war and associated economic sanctions will have serious consequences on the global economy. 

“We are seeing an increase in the oil, natural gas and food prices, including wheat and corn, where Ukraine and Russia are the largest exporters. This is one of the most serious threats to the global economy’s recovery.”

She mentioned that sanctions on Russia will severely unsettle the extensive trade ties the country has with nations in Eastern Europe and Central Asia.

She said that all this adds significant economic risk, “We are currently witnessing varying degrees of turmoil in financial markets. Then there are aspects of Cyber risk – there are many other unintended consequences at this point.”

The Global Economic Outlook will be updated with numbers in April to provide a more complete picture in terms of quantitative aspects, as per the IMF’s First Deputy Managing Director.

The IMF has allocated approximately additional 650 billion dollars last year to assist countries in recovering from the pandemic so that they have the reserves to deal with the crisis they were faced with. 

“Typically, the way a country uses its reserves involves voluntary exchanges with other member countries to convert those Special Drawing Rights (SDR) – freely usable currencies – such as dollars, euros, and so on. This is now much more difficult for Russia to accomplish,” she explained.

“We must strictly adhere to the articles that govern what we can and cannot do. We have provided the SDRs; now it is up to the countries to decide how to use them. However, this is a rapidly changing scenario, and things may change in the future, but for the time being, this is where we are,” she remarked.