Russia pays debt payments to avoid default

Russia pays debt payments to avoid default
Russia pays debt payments to avoid default

Russia says it has paid all of its debts that were not paid on time, avoiding a possible default next week.

The $650 million in interest payments were made in dollars, according to the statement.

Elvira Nabiullina, Russia’s central bank director, told the media on Friday that “there cannot be any notion of default,” but allowed that “payment challenges” exist.

As the May 4 deadline drew nearer, concerns about Moscow’s ability to meet its duties grew.

Payments on the country’s $40 billion in international bonds must be made in the currency that was specified when the bonds were issued.

Sanctions put in place by the West and its allies after Russia invaded Ukraine have made it hard for the country to get its money from international institutions.

Moody’s and other credit rating agencies didn’t like Moscow’s plan to pay back these bonds in roubles earlier this month.

Credit rating agencies say that if Russia doesn’t pay in dollars, it would be a default, which would have a big impact on the country’s economy and its ability to borrow in the future.

It happened in 1998 when Russia was in the middle of a financial crisis. It defaulted on debt that was worth roubles.

Following the Bolshevik revolution in 1918, it defaulted on its foreign currency loan. Vladimir Lenin, the leader of the Russian revolution at the time, didn’t want to accept the debts that the Tsarist regime left behind.

On May 4, a 30-day grace period for investors who bought two bonds from Russia will come to an end. By then, they must have received their money.

Russia claimed it had sent the payments to Citibank’s London branch, one of the banks in charge of disbursing the funds. The payments were made, according to a US official, but not with frozen US currency assets.

Russia’s problems are expected to get worse before May 25, when sanctions rules are set to change. This will make it even more difficult for western agents to process Russian debt payments.

In Russia, interest rates were slashed by 3% on Friday in an effort to bolster the economy. The main loan rate, which was increased in the aftermath of the invasion, is now at 14%.

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