West wants an ‘artificial default’ in Russia: gov’t

THE Russian Ministry of Finance on March 14 accused foreign countries of wanting to force Russia into an “artificial default” through unprecedented sanctions over Ukraine and said it would meet its debt obligations.

As Russia is due to make an interest payment on its external debt later this week, Moscow warned that it will be doing so in rubles if sanctions prevent it from using the currency of issue.

“The freezing of foreign currency accounts of the Bank of Russia and of the Russian government can be regarded as the desire of a number of foreign countries to organise an artificial default that has no real economic grounds,” Minister of Finance Anton Siluanov said in a statement.

Ratings agency Fitch last week downgraded Russia’s sovereign debt rating deeper into junk territory, warning that the decision reflects the view that a default is “imminent”.

But Siluanov denied that Russia “cannot fulfil the obligations” of its government debt.

He said Russia “is ready to make payments in rubles” according to the exchange rate of Russia’s central bank on the day of the payment, including its eurobond issued since 2018.

Russia is due to make a combined $117 million in interest payments on two dollar-denominated bonds on March 16, although it has an automatic 30-day grace period.

International Monetary Fund chief Kristalina Georgieva on March 13 told the CBS show Face the Nation that while Russia has money to pay its debt, it “cannot access it”.

Sanctions on Moscow over its “special military operation” in Ukraine delivered an unprecedented blow to Russia’s banking and financial system, with a large part of its foreign currency reserves frozen.

Russia has boosted efforts to prevent money from leaving its borders and to support the ruble, which has already seen a precipitous drop in value against the dollar.