Reports claim that the Russian Federation is in default on its foreign debt, for the first time since 1918. According to bondholders, they have not been paid by the transcontinental nation. However, Russia’s finance ministry denies the allegations and says the country made the payments via the Euroclear monetary system.
Russia Is Accused of Foreign Debt Default, Moscow’s Finance Ministry Claims the Country Paid Bondholders
According to media reports, Russia is now in default on its foreign currency loans for the first time since more than 100 years. Russia has been unable to use international payment networks due to financial sanctions placed on the country. A $100 million interest payment of the Kremlin was missed on Sunday after U.S. Treasury stopped a process that would have allowed it to convert rubles into dollars.
Bondholders now have to decide if the default is an official one or not after the grace period ends. Reuters claims Russia’s move to not pay is “an act of political theatre at bondholders’ expense” and default makes them “political stooges.” The Kremlin, however, claims otherwise and says that the default is a “farce” because Western sanctions blocked the country’s payments. Russia’s finance ministry said it had made the payments to bondholders denominated in euros.
Russia Blames Financial Blockade — Kremlin Spokesperson Says It’s ‘Not Our Problem’
Russian officials claim the default claims are fake, they have enough money to pay them and that sanctions prevent institutions from accepting funds from Russia. Russia’s last foreign debt default was back in 1918, during the Bolshevik Revolution. An NBC report has quoted a Kremlin spokesperson, Dmitry Peskov, who told the reporters that the payment was blocked by Western sanctions and because of this fact, Peskov said it’s “not our problem.”
According to reports, the Russian Federation also claims that it used its NSD and Euroclear money system as leverage. According to the Kremlin, it has fulfilled foreign investor obligations despite financial blocksade. Reuters reports that Russia’s President Vladimir Putin codified a decree that picks specific banks to handle the bondholder payment obligations. Furthermore, Putin aims to travel to Tajikistan on Tuesday as it will be the president’s first trip since the start of the ongoing war.
Do you agree with the claims of media that Russia has defaulted in its foreign debt payments? Do you agree with the Kremlin’s statements? Comment below and let us know how you feel about the subject.
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