Russia has defaulted on its foreign-currency sovereign debt for the first time in a century. This was the culmination of tough Western sanctions that cut off payment routes to foreign creditors, the agency said.
For months, the country has been finding ways to circumvent sanctions imposed after the Kremlin's invasion of Ukraine. But at the end of Sunday, the grace period for the $100 million payment expired.
Thus, the country defaulted on its foreign exchange obligations for the first time since 1918, Bloomberg points out.
Back in March, economist Sergey Guriev told The Insider that a default was imminent, but that people would not be affected because what is usually associated with the 1998 default is a huge devaluation, a surge in inflation, a freeze on deposits, the closing of stock markets – and this has already happened after the start of the war with Ukraine.
After the imposition of sanctions against Russia and the ban on the use of foreign currencies, the Ministry of Finance faced problems in redeeming government bonds denominated in foreign currencies. For some time, the US Treasury allowed Russia to service its external debts from reserves, but later banned this payment channel as well. The Russian side announced that in fact the United States is pushing Russia into a technical default, despite the fact that Russia has the funds to pay off its obligations. As a result, the authorities decided to convert the liabilities into rubles.