Default Threat and Ruble Collapse

Jakarta, CNBC Indonesia – Russia is in danger of defaulting on its debt following efforts to pay global bonds maturing in United States (US) dollars using rubles. The Kremlin is ready to take the necessary steps to avoid default.

Related to this, Russia plans to take legal action if the West forces the country into a debt default status.

“Of course we will sue because we have taken all necessary steps to ensure that investors receive their payments,” Russian Finance Minister Anton Siluanov told the newspaper. Izvestiaas quoted ReutersMonday (11/4/2022).

He said he was ready to prove his commitment in court, which he believed would confirm Russia’s efforts to repay debt, both in foreign currency and rubles. However, he did not elaborate further on what actions would be taken.

“This is not going to be an easy process. We have to be very active in proving our case, despite all the difficulties,” he said.

Meanwhile, Russia is facing its first debt default in more than a century after making arrangements to make international bond payments in rubles earlier this week, even though those payments are due in US dollars. Last week, Siluanov said Russia would do everything possible to ensure its creditors were paid.

Siluanov said Russia’s external liabilities account for about 20% of its total public debt, which amounts to about 21 trillion rubles (US$261.7 billion). Of that amount, about 4.5-4.7 trillion rubles are external liabilities.

“If an economic and financial war is waged against our country, we will be forced to react, while still fulfilling all our obligations,” Siluanov said. “If we’re not allowed to do it in foreign currency, we do it in rubles.”

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