The rating agency Moody’s has determined that Russia has defaulted on payments because international investors have not paid their debts on time. Specifically, this concerns interest payments on two government bonds that have not reached creditors even after a 30-day default period, the American company announced Monday (local time) in New York.
It has been over a hundred years since Russia last defaulted on its foreign debt. The last time the country was unable to settle its accounts with international creditors was in 1918 after the Bolshevik Revolution. Russia’s last state default was in 1998 due to cash shortages caused by falling oil prices and the Asian crisis, but at the time it only affected domestic debt in rubles.
Sanctions block payments
This time it’s not about bankruptcy in the truest sense of the word. Russia’s treasury is well stocked, but the Kremlin is struggling to pay off foreign debts over Western sanctions over the war in Ukraine. According to the Interfax agency, Kremlin spokesman Dmitry Peskov said on Monday that Moscow’s payments would be blocked because of sanctions “is not our problem”.
The problem is manageable, according to the IMF
Given the known problems associated with the sanctions, the default comes as no surprise. In the financial markets, the risk was considered determined and manageable for months. As early as March, the head of the International Monetary Fund (IMF), Kristalina Georgieva, described the involvement of international banks in Russia as “absolutely not systemically important”.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
