The Russian Ministry of Finance shifted its obligation to repay the outstanding in rubles, which it should have fulfilled in dollars. Indeed, an American bank refused to carry out the dollar transfer, citing the sanctions imposed on Moscow.
Kremlin spokesman Dmitry Peskov said on Wednesday that Russia had no reason to file for bankruptcy because it “has all the resources it needs to pay off its foreign debt.” He noted, however, the freezing of “significant amounts” of Russia’s foreign exchange reserves in foreign accounts.
If the situation continues, Russia will have to pay only in rubles, Bischoff said, adding that Russia’s “artificial bankruptcy” can only happen if ruble payments are also blocked.
The sanctions have frozen nearly half of Russia’s $640 billion in gold and foreign exchange reserves, but the country continues to generate billions of dollars in revenue from crude oil and gas exports. The Russian Ministry of Finance said, on Wednesday, that it was forced to pay in rubles to holders of euro-dollar bonds due in 2022 and 2042, as a foreign bank refused to execute a transfer order of $ 649 million for policyholders.
The Finance Ministry said Russia may consider allowing holders of Eurobonds for 2022 and 2042 to convert ruble-denominated repayments into foreign currencies once access to foreign currency accounts is restored. Until then, the ruble equivalent of international bond payments to policyholders in the so-called “unfriendly countries” will be kept in special “C” accounts with the Russian National Clearing House, the ministry added.
White House spokesman Jen Psaki said on Wednesday that Moscow could choose between using its valuable foreign exchange reserves and filing for bankruptcy.
Financial experts and credit rating agencies have warned that Russia will go bankrupt for weeks, with limited access to currency and gold reserves. But, as Peskov pointed out, it was noted that this would only be technical bankruptcy, and not actual bankruptcy in the classical sense.
Financial markets have identified the possibility that Russia will default on its major debt in the near future. However, this default is not expected to cause serious waves in international markets. Russia has never defaulted on its debts since the Bolshevik Revolution of 1917.
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