Russia’s finance ministry said it had approved a temporary procedure for repaying foreign currency debt, but warned that payments would be made in rubles if sanctions did not allow banks to meet their obligations in the currency of issue, according to Reuters.
Western sanctions over Ukraine’s war have cut off Russia’s access to key operations in global financial markets, causing the worst economic crisis since the collapse of the Soviet Union in 1991.
Statements that Russia cannot meet its foreign debt obligations are untrue, Finance Minister Anton Siluanov said, adding that the country has the necessary means to do so.
The government is due to pay $ 117 million on dollar-denominated bonds on Wednesday (March 16th).
The Cabinet of Ministers said it had approved an interim procedure that allowed banks to make payments in foreign currency, but stressed that the possibility of doing so depended on sanctions.
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Some Russian banks have been excluded from the SWIFT international payment system, making it difficult to withdraw money from Russia.
If payments cannot be made, the Ministry of Finance has announced that it will repay Eurobonds in rubles, which is tantamount to default. The ruble has fallen to a record low in recent weeks.
The freezing of foreign currency accounts of central banks and the government can be seen as the desire of some Western countries to arrange an artificial default, said Siluanov.
On March 5, Russian President Vladimir Putin signed a decree on the temporary procedure for fulfilling obligations to some foreign creditors, which allows to pay foreign currency debts to creditors and countries that have “unfriendly actions” against Russia, in rubles, reminds TARS. This will be done through special accounts in Russian banks.
Siluanov said on March 10 that Russia would repay its foreign currency debt on March 16 only if its foreign currency accounts, about $ 300 billion, were unfrozen. If this does not happen, Moscow will repay and service its foreign currency liabilities in rubles.