With sanctions imposed and Russian banks cut off from the Swift payment network, the country may resort to paying off debt with roubles.
For the time, Russia will repay debt denominated in foreign currencies but warned that it might have to resort to paying off debt with roubles in the face of sanctions, according to a story in the «Financial Times» (behind paywall).
«Claims that Russia cannot fulfill its sovereign debt obligations are untrue,» the «FT» story said citing Russian Finance Minister Anton Siluanov. «We have the necessary funds to service our obligations.»
Temporary Measures
Temporary measures have been authorized so that banks can make payments, but that remains dependent on sanctions. One problem is that many Russian banks have had their access to the Swift payment network revoked, making it much more difficult for Russia to make international payments.
Should it prove impossible to make payments in foreign currencies, the finance ministry said it would repay Eurobond debt in roubles, the «FT» said, which is essentially defaulting on the loans.
Artificial Default
«The freezing of the central bank and government's foreign currency accounts can be seen as a desire from several Western countries to organize an artificial default,» Siluanov said.
