Associated Press

Russia says it will pay foreign debt in rubles after US ban

REUTERS/Maxim Shemetov//File Photo
A sign is on display outside Russia’s Finance Ministry building in Moscow, Russia March 30, 2021. A sign reads: “Ministry of Finance of the Russian Federation”.

11:40 JST, May 26, 2022

Russia says it will pay dollar-denominated foreign debt in rubles, a move that is likely to be seen by foreign investors as a default.

The U.S. Treasury Department led by Janet Yellen allowed a license to expire Wednesday that permitted Russia to keep paying its debtholders through American banks. The license applied to American investors and international investors who have dollar-denominated debt or bonds.

The Russian Finance Ministry said it will pay in rubles and offer “the opportunity for subsequent conversion into the original currency.” The ministry didn’t give a timeframe for that to happen.

Russia has not defaulted on its international debts since the 1917 Bolshevik Revolution, when the Russian Empire collapsed and the Soviet Union was created. Russia defaulted on its domestic debts in the late 1990s during the Asian financial crisis but was able to recover from that default with the help of international aid.

“The current situation has nothing whatsoever in common with the situation in 1998, when Russia did not have enough means to cover its debts,” Finance Minister Anton Siluanov said in a statement.

“Now there is money and there is also the readiness to pay. This situation, artificially created by an unfriendly country, will not have any effect on Russians’ quality of life.”