Russia paid part of its debt in rubles

The Russian Ministry of Finance announced on Wednesday After I paid in rubles Part of the public debt is about $650 million. There is talk of interest and other maturities that were set in dollars and therefore, according to contracts, had to be paid in dollars. But Russia was not able to pay in dollars because the US administration prevented it with a decision it made on Monday.

On Monday, the US Treasury blocked Russia’s ability to access its dollar reserves held in US banks, including to pay off its debt. Reserves were already frozen at the beginning of the invasion of Ukraine, but debt repayment was excluded. This exception was removed earlier in the week.

Accordingly, the Russian government, on Wednesday, asked one of the US banks with reserves in dollars, JPMorgan Chase, to repay the debt of 650 million. But JPMorgan, after consulting the US government, refused to make the deal. At that point, Russia had to use a local bank (and rubles) for payment.

Russia has a 30-day “grace period” to settle things, and find dollars to pay off its debts in the correct currency: otherwise, according to various rating agencies, pay off your debts in a different currency than what is expected from the contracts, this could constitute a default. , i.e. it can be compared to not paying. One might talk about a “technical default”, because Russia would have the money to pay it, which was blocked by sanctions.

However, the Russian Treasury announced that it considers its obligations to be fulfilled “in full”, although the payment was made in a different currency. It is not yet clear what European governments will decide to do in this regard, including with regard to deadlines for other debt that will arrive in the coming weeks.

– Read also: Russia risks default