Russia has had to suspend foreign payments twice before, during the Russian Revolution of 1917 and the domestic Russian financial crisis of 1998.
Forcing the country to suspend foreign payments is a result of the sanctions imposed by Western countries after the invasion of Ukraine. The condition is that the debt be paid in euros or dollars, but Russia can only offer payment in rubles or Chinese yuan.
The Kremlin wrote, determined to avoid canceled payments, which are seen as a blow to national prestige BBC.
The Russian authorities call it a farce
The Russian Finance Minister likened the situation to a “farce”, in which Russia wants to pay the money.
And the BBC quoted Finance Minister Anton Siluanov as saying: “Everyone understands that this is not bankruptcy at all.”
The debt was due to be paid off on Sunday, and Russia claims it sent the money to Euroclear Bank, which will send the money to creditors.
But according to Bloomberg News, the money is stuck there.
Little importance to Russia
Concretely, the canceled payment will not be of great importance for Russia at the moment. The natural course is that countries that are unable to repay their foreign debt find it very difficult to borrow money from other countries, but Russia is actually prohibited from borrowing money from Western countries.
But it could still put Russia under increasing pressure.
“There are repayment terms on all debt instruments, so if they fail to repay, they usually immediately start repayment claims on other loans, so Russia could face immediate payments of about SEK 248 billion in that case,” Chris Weaver, previously said. Chief Strategist at Sberbank-CIB to BBC Today.
However, in the short term, Russia can be calm, thanks to the turnover of expensive commodities like oil, he says. But he also believes that the country’s economic recovery will be “more difficult” in the long run.
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