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Russia misses payment deadline, entering default

Russia misses payment deadline, entering default

Russia misses payment deadline, entering default

Russia misses payment deadline, entering default. (credits: Google)

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  • Russia missed a $100 million payment that was due on Sunday.
  • Sanctions prevented Russia from delivering the money to its international creditors.
  • The scenario has been referred to as “a farce” by Russia’s finance minister.
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After missing a crucial deadline, it’s thought that Russia has defaulted on its debt for the first time since 1998.

Russia has the resources to fulfil a $100 million payment that was due on Sunday, but sanctions prevented Russia from delivering the money to its international creditors.

The default would have been a serious blow to the country’s reputation, and the Kremlin was determined to prevent it.

The scenario has been referred to as “a farce” by Russia’s finance minister, and no immediate effects are anticipated.

According to Chris Weafer, CEO of Moscow-based firm Macro Advisory, Russia doesn’t need to raise money abroad because it is profiting from expensive commodities like oil.

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But if the situation with Ukraine and the international sanctions improves, he claimed it will lead to a “legacy” problem.

When we reach that point, “this is the kind of activity that will hang over the economy and make recovery much more difficult,” he warned.

On May 27, the $100 million interest payment was due. According to Russia, the funds were transferred to a bank called Euroclear, which would then distribute the funds to investors.

However, according to Bloomberg News, that payment has been held there and has not yet reached the creditors.

In the meantime, the Reuters news agency, which quoted two sources, claimed that certain Taiwanese holders of Russian bonds with euros as the unit of currency have not received interest payments.

It is deemed a default because the money was not received within 30 days of the due date, which was Sunday night.

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While refusing to confirm if the payment had been stopped, Euroclear insisted that it complied with all restrictions put in place as a result of Russia’s invasion of Ukraine.

Russia denied having missed a payment on the obligation. According to Dmitry Peskov, a spokesman for the Kremlin, Moscow had already paid the payments that were due in May, and Euroclear’s decision to withhold them because of the sanctions was “not our problem.”

According to the RIA Novosti news wire, Russian Finance Minister Anton Siluanov acknowledged that overseas investors would “not be able to receive” the payouts.

He disputed that this amounts to a genuine default, which often occurs when governments refuse to pay or their economies are so fragile that they are unable to find the money. Russia wants to pay and has enough of money to do so.

“The general consensus is that this is not at all a default. This entire scenario appears to be a sham.”

Normally, countries that have defaulted cannot borrow any additional money, but sanctions have effectively prevented Russia from borrowing in Western markets.

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Additionally, it’s estimated that Russia makes $1 billion a day from the export of fossil fuels, and its finance minister, Anton Siluanov, stated in April that the nation had no intentions to take on additional debt.

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