Russia is ready to pay its debts ‘in roubles’ as a large part of its foreign currency reserves are frozen over Ukraine attack.
Russia’s finance ministry has accused foreign countries of wanting to force Russia into an “artificial default” through unprecedented sanctions over its war in Ukraine and said it would meet its debt obligations.
“The freezing of foreign currency accounts of the Bank of Russia and of the Russian government can be regarded as the desire of a number of foreign countries to organise an artificial default that has no real economic grounds,” Finance Minister Anton Siluanov said in a statement on Monday.
Ratings agency Fitch last week downgraded Russia’s sovereign debt rating further into junk territory, warning that the decision reflects the view that a default is “imminent”.
The government is due to pay $117m on two of its dollar-denominated bonds on Wednesday.
“Claims that Russia cannot fulfil its sovereign debt obligations are untrue,” Siluanov said. “We have the necessary funds to service our obligations.”
The finance ministry said it had approved a temporary procedure to allow banks to make payments in foreign currency, but said the possibility of those payments going through would depend on sanctions.
Several Russian banks have been banned from the SWIFT international payments network, hampering efforts to move money outside Russia.
Payments in ‘roubles’
If payments are not possible, Siluanov said, Russia “is ready to make payments in roubles” according to the exchange rate of Russia’s central bank on the day of the payment, including its Eurobond issued since 2018.
Western sanctions on Moscow over its war in Ukraine delivered an unprecedented blow to Russia’s banking and financial system, with a large part of its foreign currency reserves frozen.
Russia has boosted efforts to prevent money from leaving its borders and to support the rouble, which has already seen a precipitous drop in value against the US dollar.