Sanctions have triggered a severe economic crisis in Russia. Russia is threatening to repay foreign currency debt with the sharply devalued ruble.
As a result of the war of aggression against Ukraine, the West has imposed numerous sanctions on Russia, including the freezing of financial reserves abroad. Notwithstanding, Russia has agreed to continue paying its debts. According to the “Handelsblatt”, a corresponding preliminary procedure had been approved, the Ministry of Finance announced on Monday in Moscow. “In order to fulfill the Russian government’s obligations under Eurobonds, the Ministry of Finance will issue payment instructions to the commissioned banks.” But it will only be paid in rubles,” says the ministry.
But the payments should only be made with the currently heavily devalued ruble – at least the financial obligations to “unfriendly states”. Whether debts are actually repaid depends on the restrictions on the government and central bank associated with the sanctions, the Ministry of Finance said, according to the “Handelsblatt”. In addition, the Ministry of Finance only wants to pay at the exchange rate of the Russian central bank. Which states are “unfriendly” has not yet been mentioned.
Russia cannot use half of its reserves
Finance Minister Anton Siluanov said on state television on Sunday that Russia had land reserves of around 640 billion US dollars, around half – i.e. 300 billion US dollars (equivalent to 274.5 billion euros) – could not be used due to the sanctions. “The freezing of the central bank’s and government’s foreign currency accounts can be seen as a desire by several Western countries to organize an artificial default,” Siluanov said, according to ntv.
Claims that Russia cannot meet its sovereign debt obligations are false, Siluanov said in a statement. “We have the means to meet our commitments.” The government is due to repay $117 million to its creditors on Wednesday alone for two of its US currency-denominated bonds.
Poor rating for Russia’s credit rating
Rating agencies such as Fitch and Moody’s recently rated Russia’s creditworthiness very poorly. The sanctions represent “a major shock to Russia’s credit base and could undermine the willingness to service the national debt,” Fitch justified the action. Moody’s said the sanctions were more severe than expected.
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Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
