In defiance to the West, Russia says has money to pay debts
According to Russian Finance Minister Anton Siluanov, Russia has authorised payment on two US dollar bond coupons due on Wednesday, but it is up to Western powers, namely the US, to extract the monies from the country’s blocked foreign currency accounts and pay bondholders.
In an interview with RT Arabic, the official remarked, “The feasibility or difficulty of completing our commitments in foreign currency does not depend on us; we have the money, we made the payment; now the ball is in America’s court.”
He went on to say that Washington should explain if payments may be made from Russia’s foreign currency accounts.
The finance minister confirmed that nearly $300 billion of Russia’s forex holdings have been seized.
On March 16, Russia must pay $117.2 million for two sovereign Eurobond issuance. On Monday, the Finance Ministry declared that it had issued an order to transfer the funds to Euroclear, an international depository and clearing mechanism.
The money will subsequently be transferred to bondholders by the depository. The payment order is in US dollars, but the money must be removed from blocked Russian foreign currency accounts before bondholders may get it. However, this may be difficult.
Half of accounts sanctioned
Nearly half of Russia’s reserves (approximately $300 billion) and the Russian Central Bank’s (Bank of Russia) foreign currency accounts have been blocked as a result of sanctions imposed after Russia’s military action in Ukraine began last month.
Although no explicit limitations on activities to service Russia’s external debt have been imposed, international banks may refuse to make payments on the debt out of fear of punitive US penalties.
Analysts say that if the foreign currency order is not implemented, the amount due will be transferred to bondholders’ accounts in rubles at the Russian Central Bank’s exchange rate on the day of payment.
Despite the fact that sanctions make fulfilling Russia’s responsibilities harder, the nation plans to do so, according to Siluanov, who claims Russia has all the required finances. There are no serious economic reasons for Russia to default, as the official stated before.
Russia does it differently
Experts also believe Russia is fiscally sound, citing its GDP ($1.65 trillion) to foreign debt ($478.2 billion) ratio of less than 25%, which backs up Siluanov’s earlier claim that the West is attempting to force Russia into a “artificial default.”
Russia has also announced that it is not imposing sanctions on foreign firms and has no plans to nationalise foreign assets in Russia.
The country has no plans to nationalize foreign assets in response to seizures of Russian property abroad, “Unlike Western countries, we will respect property rights,” says President Vladimir Putin.
The arrests of the nation’s foreign assets, and those of Russian businesses, is a lesson for the country’s entrepreneurs, according to Putin.