Russia made last-minute debt payments to avoid default

Reading time:1 minute, 54 seconds

To avoid default, Russia made last-minute debt payments

The Kremlin tapped into precious foreign exchange reserves to make a bailout payment

This Friday, Russia avoided a debt default by making a last-minute payment from its foreign exchange reserves outside the country, US Treasury Department officials said.

The amount of the payment was not disclosed, but earlier in April Russia’s Treasury Ministry said it had attempted to make a $649 million payment due April 6, 2022, against two one-to-one bonds. certain US bank previously identified as JP Morgan Chase (JPMorgan Chase).

At that time, the tightening of sanctions imposed for Russia’s invasion of Ukraine made it impossible to accept payment, so Moscow tried to pay the debt in rubles. The Kremlin, which has repeatedly said it has the financial ability and willingness to continue paying its debts, argued the emergency gave it a legal basis to pay in rubles rather than dollars or euros. .

Investors and rating agencies did not believe or expect that Russia would be able to convert rubles into dollars before the 30-day grace period expired next week. This led to speculation that Moscow was heading for a historic default on its debt.

Russia has not defaulted on its foreign debt since the Bolshevik Revolution of 1917, when the collapse of the Russian Empire led to the creation of the USSR.

Finance Ministry officials, who declined to give their names because they are not authorized to make statements to the press, explained that Russia, to make Friday’s payment, used its foreign exchange reserves, which are currently outside its borders.

Since the United States imposed sanctions on the Russian Central Bank at the start of its invasion of Ukraine, Russia has had the option of using or only current income from activities such as the sale of oil and gas or existing foreign exchange reserves located outside the country. .

The United States has tried to pressure Russia to use its foreign exchange reserves or any revenue from oil and gas sales to deplete its financial resources.

The Russian Finance Ministry said it made payments to the London branch of Citigroup. A Citigroup spokesperson declined to comment on the bank transaction.

About the author of the article

Natasha Kumar

Natasha Kumar has been a reporter at the news desk since 2018. Prior to that, she wrote about early adolescence and family dynamics for Styles and was a legal affairs correspondent for the Metro bureau. Prior to joining The Times Hub, Natasha Kumar worked as an editor at the Village Voice and as a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To contact me, contact me via my