For the first time in a century, Russia defaulted on its foreign-currency government debt.
However, the situation is a bit tricky because the government claims to have funds but is unable to transfer them to creditors due to sanctions that have cut Russia out off international financial systems.
The deadline for a $100 million overdue interest payment expired on Sunday. The Treasury Department recently closed a loophole that had allowed the Kremlin to make debt payments owed to American bondholders through American banks.
What Russia is saying
Finance Minister Anton Siluanov’s comments were prompted by the grace period that ended on Sunday based on Bloomberg.
The 30-day window was triggered when investors failed to receive coupon payments due on the dollar- and euro-denominated bonds on May 27.
Nonetheless, Anton Siluanov dismissed the situation on Thursday as a “farce.”
With billions of dollars a week still pouring into state coffers from energy exports, despite the grinding conflict in east Ukraine, he reiterated that the country has the means, and the will, to pay.
“Anyone can declare whatever they like,” Siluanov added. “But anyone who understands what’s going on knows that this is in no way a default.”c