The US Treasury Department’s Office of Foreign Assets Control (OFAC) has decided not to renew a license that allows Russia to make external debt service payments. About it says in a notice on the Ministry’s website. The license was valid until May 25.
By information Bloomberg, such an OFAC decision could lead Russia to default on international obligations for the first time since 1918. During the 1998 default, the country continued to pay its foreign debt.
In my country blocked
present tense
The decision not to renew the license was made by the US Department of the Treasury after analyzing the possible economic consequences of such a move. Experts have come to the conclusion that they will be minimal. More importantly, the symbolic significance of this step, which was taken as part of earlier sanctions against Russia for invading Ukraine.
Earlier, on May 18, Russian Finance Minister Anton Siluanov once again announced his intention to pay the state external debt in rubles if the license that allows servicing it in dollars is not renewed. Earlier, Russia has already tried to make payments in rubles, to which the holders of Russian securities did not agree.
After May 25 and until the end of 2022, Russia will need to pay nearly $2 billion in external sovereign bonds, according to Bloomberg. The next payments are scheduled for June 23-24. If they fail, a formal default may await Russia at the end of July.
Moscow threatened to take legal action in an attempt to prevent a default.
Sanctions imposed by the West after Russia’s invasion of Ukraine prohibit transactions with the Russian Ministry of Finance, the Central Bank or the National Welfare Fund (NWF).
