Washington, 8 March 2022 (TDI): The International Monetary Fund (IMF) issued a report detailing the economic fallout resulting from the Russia-Ukraine crisis and the resulting sanctions on the invading country.

The board was briefed on the economic impact of the war in Ukraine in a meeting that took place on the 4th of March. Energy and commodity prices, including wheat, have already taken a hit and are expected to increase even more as the crisis continues.

This has considerably added to inflationary pressure around the world. Poor households and poorer nations are set to suffer the most. Financial markets will also be affected as Russian banks are cut off from the rest of the world.

The crisis is creating an adverse shock to activity along with inflation. Monetary authorities will have to carefully monitor the pass-through of rising international prices to domestic inflation to formulate appropriate responses.

Fiscal policy will have to be adjusted to offset living costs to help the most vulnerable. The sanctions on Russia’s Central Bank and the removal of the country’s many financial institutions from the SWIFT payment system have already had a significant impact on the Russian economy.

The country has been unable to pay for imports and the value of the Ruble has tumbled. Countries who are dependent on trade with Russia have also felt the shocks of this. Neighboring countries have also seen an increase in the number of refugees.

Over 1 million Ukrainians have been displaced as a result of the conflict. IMF will continue to monitor the spillover effect of the crisis on neighboring countries. The conflict is set to have considerable effects on the global economy.

The fund advises countries to adjust their macroeconomic policies to manage the spillover effects including adjusting the prices of food and commodity prices. Ukraine has also requested an emergency financing of $1.4 billion through the IMF’s rapid financing instrument. The request will be brought to the executive board by next week.