The Ministry of Finance of the Russian Federation explained why the transition to Eurobond payments in rubles does not mean a default

Minister of Finance of the Russian Federation Anton Siluanov

Minister of Finance of the Russian Federation Anton Siluanov

©Maksim Konstantinov / Global Look Press

The termination of payments on Russian Eurobonds in foreign currency and the transition to the ruble scheme are connected with a force majeure circumstance and do not mean a default, Russian Finance Minister Anton Siluanov said on June 23. The Russian Federation does not refuse to fulfill its obligations under government securities and, as a responsible borrower, takes all possible actions to bring funds to investors in full, the minister said.

According to Siluanov, default is the absence of payment by the debtor, writes on Thursday RIA Novosti. The payment to Russia will be carried out, but the problem is that investors will not be able to receive it. Firstly, because of the prohibition for depositories, correspondent banks, settlement and clearing systems to conduct any transactions related to the Russian Federation. Secondly, foreign investors are directly prohibited from receiving Russian payments, the head of the Russian Ministry of Finance explained.

It turns out a situation where the debtor wants to pay and has the financial ability to do so, but cannot make the payment as previously agreed. “What in this situation – a situation of force majeure – can and should the debtor do? He must choose the method that is available to him under these conditions. This is the ruble and Russian infrastructure,” Siluanov added.

At the end of May, the US Treasury did not renew the license that allowed the Russian Federation to service its external debt under the sanctions imposed by the West. White House then promised Russia default and pariah status. Russian Finance Minister Anton Siluanov emphasized that even if Russia were able to declare a technical default, this would not have a detrimental effect on the Russian economy.

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