As debt service deadline nears, Russia says payments will be made in rubles

As Russia nears its debt service payment date, Kremlin said it will start paying its foreign debt in rubles.

“Russia is not able to right now to borrow in global financial markets, it has no access to capital markets. If Russia is unable to find a legal way to make these payments, they technically default on their debt,” US Treasury Secretary Janet Yellen said as the Biden administration disallowed exemption for Russia to pay foreign debt held by American investors with funds held in Russia.

Russian finance minister Anton Siluanov accussed “unfriendly country” of “artificially” creating the current crisis.

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The United States including several other European countries have hit Russia with waves of sanctions as President Vladimir Putin announced “special military operation” against Ukraine on February 24.

Although the Russian government has attempted to pay in rubles however international bonds do not allow payment in Russia’s domestic currency.

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Reports claim Russia has to service two bonds over the next two days with payment in dollars, euros, pounds and Swiss francs, however, the other one can be paid in rubles.

Russia is set to service its next debt payment on May 27. Russia had last defaulted on its foreign debt in 1918 during the  Bolshevik revolution.

Russia had recently cut gas supplies to Finland after Gazprom said the country refused to pay in rubles. Russia had asked “unfriendly” countries to pay for gas in rubles as it tries to defy Western sanctions.

(With inputs from Agencies)

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