Sanctions that already exist and will continue to have a much stronger effect than default.
Default on Russia's foreign debt is inevitable, but will have only one consequence for the Russians, and the war will not stop. This was reported by the analytical center CASE Ukraine.
“Fundamentally, the recognition of default does not affect the Russian economy and, more importantly, its ability to fight. defaults, the Russian economy is already feeling and will feel. In fact, the only consequence of default for the economy is the temporary closure of access to external private borrowing for a period of time . Russia already has this. Sanctions that already exist and will continue to have a much stronger effect, “said CASE Ukraine banking expert Yevhen Dubogryz.
Thus, the only real consequence of default is psychological – the impact on the expectations of Russians.
“Russia's recognition of default is bad for the economy. But purely from a psychological point of view. The word 'default' is a psychological trigger for Russians who either remember the 1998 default or heard about it from their elders,” the CASE Ukraine expert said./p>
Default expectations: falling wages, rising dollar exchange rate, problems with withdrawing money from banks, declining numbers, rapid rising prices.
However, psychological consequences, as emphasized in CASE Ukraine, should not be underestimated.
“Expectations in the economy have a very strong impact. Sometimes even more than fundamental factors. Recognition of Russia's default will increase panic. More precisely, a new round of panic. People will run again, withdraw the dollar, promote the black market, stand in line at ATMs and supermarkets and so on. Panic is one of the worst things that can happen in the economy, “says Eugene Dubogryz.
Therefore, even though there are no fundamental consequences for the Russian economy from the very recognition of default as such, situational consequences, ie panic, can still accelerate the fall.
” We will have to set new restrictions, print more money, reassure the population. And this is good for us. The more demoralized the population, the worse the army will fight, “- said the expert.
But the impact of default on the militant mood of Russia and its leadership should not be expected.
” Minus here: they will still fight; for economic reasons it is too early to speak “, – noted in CASE Ukraine.
We will remind, April 4 Russia's Finance Ministry could not pay in Eurobonds in dollars , and the payment made in rubles was not accepted by a foreign correspondent bank that actually launches default mechanism of the aggressor country .
