Financial Crisis / Russian Loans: Russia’s Technical Default in June 2022, First Time Since 1918

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For the first time since 1918, Russia has not paid its external debts

Russia has been defaulting on its international debt since Monday, June 27. Russia failed to pay its investors 29 million euros and 71 million dollars in interest. The settlement was due on 27 May, but Moscow had used the 30-day grace period provided for in the agreements to meet its deadlines. This is the first time that Russia has been unable to pay its international creditors in more than a century. In 1918, the Bolshevik authorities had chosen to pay off the debt signed by the tsarist regime. Two dollar bond lines were also “forgotten” in 1998, as Paul Maknamara, GAM’s head of developing countries, recalls in his tweet. However, this happened during the restructuring of the national ruble debt giant, the edition recalls Echoes.

Repayment possible, purely technical default

Russia is in a very different situation today than it was in 1918 or 1998. Moscow has the resources to repay its lenders, in particular through gas and oil exports, and it has been keen to do so. However, the Russian Central Bank has been thwarted by sanctions that have hit the country since the invasion of Ukraine and which were significantly tightened last month. On May 25, the US Treasury terminated an exemption that allowed US financial institutions to collect and distribute Russian interest payments. ” Correspondent bank, paying agent, clearing house or custodians are now prohibited from participating in a payment received from the Russian government “says Eric Dors, director of economics studies at the Iéseg School of Management.

News of Russia’s default situation for the first time in more than a century only illustrates the strength of the steps the United States has taken with its allies and partners and the scale of their impact on the Russian economy. A US official told Reuters. On the Russian side, this artificial defect, which was caused by the will of the United States, is condemned as a “farce”. “Everyone can say what they want“said Russian Finance Minister Anton Siluanov.”But anyone who understands what’s going on knows that this is by no means the default.“The repayment, which was made in rubles due to the unavailability of the dollar, has been deposited in the Moscow Clearing House, but the money is still blocked in Russia.

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Georgie Collins

"Falls down a lot. Writer. Passionate alcohol maven. Future teen idol. Hardcore music practitioner. Food fanatic. Devoted travel fan."

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