Russia is beginning to bend under the weight of sanctions. Placed in “selective” default of payment by a rating agency, the country threatens to start legal proceedings if it is declared in default of payment by the West, says Finance Minister Anton Silouanov in an interview with the newspaper Izvestia published on Monday. “We will go to court because we have taken all necessary steps to ensure that investors receive their payments. »
“We will present to the court our invoices confirming our efforts to pay both in foreign currency and in rubles. It will not be an easy process. We will have to prove our position very actively, despite all the difficulties,” he added, without specifying which legal body Russia would turn to. Financial ratings agency S&P Global Ratings on Saturday lowered Russia’s rating for foreign currency payments to “selective default”, after Moscow settled a dollar debt in rubles last week.
Like all states, Russia borrows money in the form of bonds, often in dollars, and must regularly pay interest and repay capital. A country is considered in default when it is unable to honor its commitments to its creditors.
For several weeks, Russia has averted the danger of a default, as the US Treasury has allowed the use of foreign currencies held by Moscow abroad to settle foreign debts. But, since Monday, Washington no longer authorizes Russia to repay its debt with dollars held in American banks. Therefore, the JPMorgan bank blocked a payment from Moscow.
Russia pleads “good faith”
The Russian Ministry of Finance announced as a result that it had settled in rubles 650 million dollars due on April 4. A default on its external debt cuts a country off from the financial markets and complicates its return for years. “Russia has tried in good faith to repay external creditors by transferring the corresponding amounts in foreign currency to pay our debt. Nevertheless, the deliberate policy of Western countries is to artificially create a default by all means. »
The Minister further stated that Russia’s external debt represented around 4,500 to 4,700 billion rubles (around 52 billion euros at the current rate), or 20% of the total public debt. “If an economic and financial war is waged against our country, we are obliged to react, while fulfilling all our obligations. (…). Everyone now sees that the global economy can become an obstacle to the development of the country. We will concentrate on our own development, on the creation of national industries. »