IMF warns of ‘devastating’ economic consequences of Ukraine conflict

The International Monetary Fund (IMF) warned of the “devastating” economic consequences of the continuing conflict in Ukraine on March 5.

In a new publication, the IMF said that “while the situation remains highly fluid and the outlook is subject to extraordinary uncertainty, the economic consequences are already very severe.”

The IMF said in the statement that energy and commodity prices, including wheat and other grains, have surged, “adding to inflationary pressures from supply chain disruptions and the rebound of the COVID-19 pandemic.”

In addition to unprecedented sanctions against Russia, the escalating conflict has also triggered a wave of more than a million refugees to neighboring countries, the international financial institution added.

In its statement, the IMF said it “plans to submit Ukraine’s $1.4 billion emergency financing request to its board of directors as early as next week and that it is in discussions on financing options with the authorities of neighboring Moldova.”

“The monetary authorities will need to carefully monitor the impact of rising international prices on domestic inflation, in order to calibrate appropriate responses,” the same source recommends.

Referring to the situation for Russia, the IMF stresses that the sanctions announced by Western countries against the Russian Central Bank “will severely restrict its access to international reserves to support its currency and financial system.”

“International sanctions against the Russian banking system and the exclusion of a number of banks from SWIFT have significantly disrupted Russia’s ability to receive payments for exports, pay for imports, and conduct cross-border financial transactions,” it added.

And the IMF warned that “countries with very close economic ties to Ukraine and Russia are particularly at risk of supply shortages and disruptions and are most affected by the growing refugee influx.”