Russia has made two interest payments on dollar-denominated debt in rubles, the country's finance ministry said Thursday, as Moscow faces the risk of an external debt default.
"Funds for the payment of coupons on external bonds of the Russian Federation maturing in 2027 and 2047 in the total amount of 12.51 billion rubles (the equivalent of £234.85 million) have been received by the National Settlement Depository (NSD) eurobond payment agency," the ministry said in a statement.
"Thus, the obligations... of the Russian Federation are fulfilled in full by Russia's finance ministry," it added.
In the statement, the ministry said that it is using a new temporary payment system which came into force Wednesday, after sanctions imposed on Ukraine made it difficult for Moscow to service its foreign debt.
Under the new system, the ministry transfers the ruble equivalent of the coupon's value to the Moscow-based National Settlement Depository that reimburses creditors in rubles at the rate of the Central Bank "to ensure the maximum equivalence of payments."
"The cessation of payments on Eurobonds in foreign currency does not mean the announcement of Russia's default on foreign debt," said Finance Minister Anton Siluanov, Forbes reported.
"The creation of artificial obstacles for the Russian Federation to service the state foreign debt is necessary in order to hang the label 'default'," said Siluanov, according to Forbes. "It looks like a farce."
If the creditors are Russia-based, the funds are transferred "bypassing foreign intermediaries" but if the assets are held abroad, the funds will be transferred to special ruble accounts, a mechanism similar to that used for gas payments.
In late May, Russia said it would start paying its foreign debt in rubles after Washington ended an exemption allowing Moscow to make the payments in dollars held in Russia.
A panel of investors said earlier this month that Russia failed to pay $1.9 million of accrued interest on a sovereign bond due on April 4.
The country last defaulted on its foreign currency debt in 1918, when Bolshevik leader Vladimir Lenin refused to recognize the obligations of the deposed tsar's regime.
AFP contributed reporting
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.
