Russia will pay its foreign debt in rubles
After the US blocked Russia from paying its debt to US bondholders, Moscow says it will pay its foreign debt in rubles.
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The US Treasury Department had announced that it would not extend its sanctions waiver to allow Russia to make debt payment to US investors
Russia's State Duma Speaker Vyacheslav Volodin announced on Wednesday, after the US blocked Russia from making sovereign debt payments to US bondholders, that Moscow will make its foreign debt payments in rubles, according to RT.
The Speaker further said that Russia currently has the necessary monetary resources to make these payments.
Citing Moscow's previous experience in asking for gas payments to be paid in rubles, Volodin said on his Telegram channel "The US and the satellites supporting Washington’s decisions should get used to the ruble."
The Russian Finance Ministry confirmed that Moscow will continue to fulfill its debt obligations, despite the US' recent decision, saying that the decision "infringes...on the rights of foreign investors in Russian debt instruments and undermines confidence in the Western financial infrastructure."
It further affirmed its readiness to continue "repaying all debt obligations."
Pushing Russia into "technical default"
A notice posted on the Department of Treasury website says that Russia's general license waiver which allows Moscow to pay US debt will not be extended. The waiver is set to expire at 12:01 on Wednesday.
This decision comes just a day after Moscow announces that it will be loosening its capital control measures against its ruble, which has been on an upward movement, becoming too "strong" a currency. The rationale is that the ruble, which has been at its all-time high in 4 years, is threatening to reduce export profit. The Finance Ministry said it will be cutting the share of foreign currency earnings from 80% to 50%
This move by Washington was expected, and it is said that it will set Russia into technical default of its debt obligations. Several US outlets anticipated and reported on this decision, but it was not confirmed by the Treasury Secretary Janet Yellen.
As of April 1, Russia had a little over $57.1 billion of external public debt. The world's most prominent energy provider is not short on money to pay it, with doubling oil and gas revenues since the start of the war in Ukraine. The revenues from energy, alone, amount to $28 billion, according to Reuters.
The aim of removing the waiver is to damage Russia's reputation in international financial markets as it seeks to set the country into a "technical default."
