By © Reuters. FILE PHOTO – International Monetary Fund (IMF) Managing Director Kristalina Georgieva speaks during a joint news conference at the end of the Summit on the Financing of African Economies in Paris, France May 18, 2021. Ludovic Marin/Pool via REUTERS
By David Lawder
WASHINGTON (Reuters) -International Monetary Fund Managing Director Kristalina Georgieva said on Friday that international financial sanctions against Russia will add to the economic impacts of the war in Ukraine, which are primarily being transmitted through higher energy and grain prices, adding to inflation.
Georgieva, speaking at a Georgetown Law School event on Black History Month, also said that greater financial market uncertainty caused by the conflict may cause capital “outflows from emerging markets, when we need exactly the opposite — more financing going there.”
She also said that heightened regional tensions may impact economic activity in countries and regions surrounding Ukraine, such as Moldova and the Caucasus.
“We have already seen actions taken in terms of sanctions that would add to the economic impact of this crisis, and will primarily transmit through energy prices, as well as grain, adding to what has been a growing concern of inflation and how it can be countered,” she said.
Russia is among the world’s biggest oil exporters and also is a major grain exporter, along with Ukraine, whose Black Sea ports have been closed to shipping.
Georgieva also said that she was concerned about her brother, who is married to a Ukrainian woman and who is currently in Kharkiv, Ukraine’s second-largest city, where heavy fighting is taking place.
“When I talked to him, I feel strongly for all — for his family of course, but for everybody there — to wake up to the sounds of bombing and to be unsure about what the next would bring,” said Georgieva, a Bulgarian economist who grew up during the country’s communist era.
“I know right now it is so difficult to a pathway to peace, but peace must be pursued and we must find a way to bring that peace that people are so desperate for,” she added.
Russia sanctions to add to higher energy, grain prices amid Ukraine war-IMF chief
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