Russia defaults on its foreign debt, the first in a century

The headquarters of the Russian Central Bank in Moscow.

(Illustrative image) © Ludvig14/wikimedia.org

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1 min

According to Bloomberg, Russia has defaulted on its foreign debt for the first time in more than a century.

And that because of Western sanctions.

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The Russian state says it paid the $100 million installment due on May 27.

Interest payments for two Eurobonds.

The money was to be redistributed to creditors on Saturday evening, the deadline, since the settlement provides for a 30-day grace period to complete the operation.

But at this time, creditors have received nothing, Taiwanese holders of Russian debt have attested.

And the money can't be paid out, because in the meantime, the US Treasury has banned Russia from going through US banks to make the payments, which it was doing until then.

Artificial ?

The non-payment is therefore proven this Monday, June 27.

An artificial default according to the Russian Minister of Finance.

His country has the means to honor its repayments.

Russia has an external debt of 40 billion dollars, at the start of the year it had a foreign currency reserve of 640 billion dollars to deal with it, yet half of these reserves are frozen today.

Difficult assessment

This is the first Russian default on external debt since the Bolshevik revolution.

The most recent, on the internal debt, in the 1990s, had caused a violent economic crisis.

Difficult to assess to date the consequences of this new default since - in fact - Moscow is already deprived of access to international markets because of the sanctions regime.

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