Russia threatens to default
A default on Russia’s sovereign debt will add to the problems of its economy and financial operations, making it harder for Moscow to find new sources of credit and raising the cost of an expected reserve, a US Treasury Department official said Monday.
“In the event of a default in Russia, it will be increasingly difficult to find new observers, and those who pay attention to higher interest rates, which is happening to the development of the Russian economy,” the official said.
In the environment, Russia has to pay $117 million in Eurobonds. The RF Ministry of Finance has announced that payments will be made in rubles if a low US dollar rate is adopted.
Because of its western borders, Russia cannot access its central bank’s foreign currency assets. In addition, a ban has been imposed on the share in dollars and European Unions that are under sanctions, including the Central Bank of the Russian Federation, which complicates any payments.
U.S. Deputy Treasury Secretary Wally Adeyemo previously told CNBC that choosing to pay his debts high would drain President Vladimir Putin’s resources to continue the war in Ukraine.
“This choice will ultimately put (Putin) in a position where he can decide whether to continue or pursue a second one,” Adeyemo said.
A spokesman for the US Treasury Department said the sharp drop in the price of Russian sovereign bonds, which are currently trading at 20 percent or less, is linked to a high probability of default.