wants to pay back the money, but the other party refuses to accept it? The scene of "it's hard to repay debts when you have money" happened between Russia and Europe.
Because of this, Russia was forced to face its first international debt default in a century.
Russian Finance Minister Anton Siluanov pointed out earlier that the European Union and the United States have artificially created obstacles for Russia to repay its foreign debt and deliberately labeled Russia as a "default". The current situation can be called a "farce."
It is reported that this debt dispute originated from the interest on two Russian international bonds totaling US$100 million. The interest was supposed to be repaid when it was due on May 27, but because it was not paid successfully at that time, a 30-day grace period was triggered. It was June 26 that became the real expiration date.
Russia said that they completed the necessary debt repayments using US dollars and euros as early as May, but the Eurobond Clearing Bank in Brussels withheld Russian funds.
It is precisely because of the sanctions of Western countries that cut off Russia's payment channels to overseas creditors, resulting in Russia being restricted from conducting money transactions through the international bank system, so the creditors have not yet received the money.
According to Tass news agency , the international rating agency Moody's determined on the 27th that Russia has defaulted on its European debt.
There is money that can be repaid, but the other party does not accept it. Russia has defaulted on its foreign currency sovereign debt for the first time in 105 years. The last time Russia defaulted on its international foreign debt was in 1918, when the Bolsheviks led by Lenin refused to repay the huge debts of tsarist Russia era.
In response, Russian Presidential Press Secretary Dmitry Peskov responded on the 327th that the Kremlin did not agree with the assertion that "Russia's debt defaults."
The consequences of breach of contract are serious. During the 1998 Asian financial crisis, Russia announced in August of that year that it would stop domestic debt repayments and postpone foreign debt repayments. However, although Russia completely gave up repaying domestic debt at that time, it eventually completed the repayment of international debt through debt restructuring, relief, etc. Therefore, most people in the academic community believe that this does not constitute a debt default.
Even so, this operation severely damaged the Russian economy. For a long time, Russia was unable to enter the international lending market.
Think about Argentina of " technical default ". The currency exchange rate plummeted, the financial market was hit hard, inflation was serious... Two years ago, Argentina was facing collapse.
It is worth noting that not only the two international bond interest disputes, Russia may also face other "man-made default risks" in principal and interest payments due to sanctions.
Russian President Putin 22 signed a presidential decree on the temporary payment of foreign debt through rubles , establishing a temporary procedure for the payment of foreign currency government debts, which means that the use of rubles to repay European bonds will be regarded as fulfilling debt repayment obligations by Russia. This move is seen by the outside world as the latest countermeasure.
What does it mean to repay debt in Russian rubles? It's probably like this: If creditors want to get money, they must first sign an agreement. The first clause of the agreement is to give up the claim, so that they can get payment in rubles. And creditors get the rubles and maliciously take them abroad, or they can exchange them for foreign currency, etc. . In other words, just like buying Russian natural gas , you have to settle in rubles.
Against this background, TASS reported that the Russian Ministry of Finance announced on the 23rd that it had made the first payment under the new rules. It transferred 12.51 billion rubles ($234.85 million) to the State Settlement Depository to pay for a tranche of bonds due in 2027 and 2047.
However, it is difficult for creditors to move funds out of Russia without violating Western sanctions.
Does Russia have no money to pay off its debts? Obviously not. Russia’s gold and foreign exchange reserves currently stand at about $640 billion, but about $300 billion of that is frozen due to sanctions.
In other words, if settlement is not done in rubles, Russia will consume the foreign exchange on hand. Otherwise it will be considered a breach of contract.
In response, the Russian Ministry of Finance said that Russia's stopping of using foreign exchange and using rubles to repay European bonds does not mean a debt default.If the United States and the European Union use this as an excuse to seize Russian diplomatic assets, Russia will regard it as severing diplomatic relations.
The ball has been kicked back to the feet of the European Union and the United States. We can only see how they play the game.
source | Yangcheng Evening News·Yangcheng School
pictures | Xinhua News Agency
editor | Lin Liai
