The chief economist of the International Monetary Fund on Wednesday played down worries over the impact of a Russian debt default.
The U.S. Treasury Department said it does not plan to renew the license to allow Russia to keep paying its debt holders through American banks, making a default seemingly inevitable.
Gita Gopinath said at a World Economics Forum meeting in Davos that the direct exposures to Russia are very small, but there is some concern over how markets may react.
“You could see more tension in the markets because of the indirect exposure,” she said. But even there, she said trading desks only had small allocations to Russian debt. She wasn’t willing to call a Russian debt default a foregone conclusion, but conceded it was likely when looking at market pricing.
Gopinath named Austria and Italy as the most exposed to Russia of European countries. Italian Finance Minister Daniele Franco said the direct exposure to Russia was some €8 billion as he said the proportion of loans from companies that have at least 10% of their sales to Russia and Ukraine was 4% to 5%, which he called manageable.