Russia Calls the Default a “Farce” after Being Cut Off from Global Financial Cycle

Russia has defaulted on its overseas debt for the first time since 1918 after missing the grace periods on two eurobond coupons amount $100 million expired on Sunday.

According to the report, the Russian government has enough money to meet its obligations and is willing to pay, but the financial sanction by western countries made it impossible to access the international banking networks to get the payments to international creditors.

Moscow was able to fulfill its payments over $40 billion-dominated in dollars and euros on time up until this one.

However, this $100 million interest payment was due on 27 May and according to the Russian government, the payment was transferred to Euroclear, a bank which would then distribute the payment to creditors, but the money had been stuck there.

The Russian Finance Minister calls the default situation a ‘farce’ as the money did not reach creditors within the grace period, thus spelling a default for the Kremlin. He did not admit to the term ‘default’ as the country has the money and is willing to pay only to get cut off by western sanction measures.

Seeing that future defaults would be inevitable, Russia issued a decree on June 23 stating that all future debt payments would be made in rubles through a Russian bank, the National Settlements Depository, despite the payment terms of the contracts being made for dollars, euros or other currencies.