Just in time, Russia averts debt default
Russia has managed to make its debt payments in US dollars just before its deadline
The debt payments have reached the accounts of a few investors
The country still has international bonds of about $40 billion
Meeting yet another deadline, Russia has managed to make its debt payments in US dollars just in time to avoid default. The country was on the brink of default just before its finance ministry changed the decision from paying in rubles to making payments in US dollars.
Several agencies speculated that the impending default would mark the country’s first foreign debt default since 1917. However, Russia met the necessary requirements in foreign currency right towards the end of a 30-day grace period.
On April 29, it declared that it would change its policy and make the payments through some of its dollar reserves which did not have sanctions as they were not kept in the West.
According to BBC, the news of the completion of payments was verified by a US official.
"Russia was forced to choose between draining their remaining valuable dollar reserves or new revenue coming in, or default," the US official said.
"Russia has made their debt payment using funds located outside the US or other partner jurisdictions. These valuable reserves have permanently left Russia and can longer go towards funding their invasion of Ukraine," the official added.
According to some sources quoted by Reuters, the debt payments successfully reached the accounts of a few investors.
While Russia managed to escape a historic default this time, it still has international bonds of about $40 billion unsettled that pose yet another challenge in averting a debt default. The country might find it difficult to pay debts after May 25, the date when provisions of the US Treasury that permit repayments and debt interest are scheduled to expire.
The last time Russia failed to pay its government debt was in 1998, during President Yeltsin's tenure, when the country experienced an economic crisis.