Russia has, for the first time in more than a century, been late in paying its state debt in foreign currency after failing to make two payments by Sunday night’s deadline.
Moscow missed the deadline meet a 30-day grace period for interest repayments that were originally due on May 27, but it could be some time before the default is confirmed.
The non-payment of the debt stems from the sanctions imposed due to the Russians invasion of Ukraine, which was launched in late February. The task is the first of its kind since 1918, although Russia has called it artificial because it can afford to pay its debts, but sanctions have frozen its foreign exchange reserves held abroad.
“There is money, and there is a willingness to pay,” Russian Finance Minister Anton Siluanov said last month. “This situation, artificially created by the enemy country, will not affect the quality of life of the Russians.”
The US Treasury Department last month, it ended Russia’s ability to repay debt to international investors through U.S. banks. The Russian Finance Ministry then announced that it would pay debts denominated in rubles in rubles and offer “the possibility of subsequent conversion into the original currency”.
The state owes about $ 40 billion in foreign bonds, about half of which is owed to foreigners.
Before the Russian war against Ukraine, it had about $ 640 billion in foreign currency and gold reserves. Much of it was kept abroad, but has since been frozen.
Russia did not pay its domestic debts in the late 1990s, but managed to recover with the help of international aid.
Non-payment of foreign debt was inevitable for Russia because investors had been predicting for months that Moscow would pay. Insurance contracts covering Russian debt for weeks gave the country an 80% probability that it would pay.
The Associated Press contributed to this report.
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