Russian President Vladimir Putin signed a decree on the temporary procedure for fulfilling obligations on Russia’s external debt in foreign currency, which implies making such payments in rubles. Document published on the official Internet portal of legal information on Wednesday, June 22.
Now Russia’s obligations under government Eurobonds will be considered fulfilled after payment in rubles at the rate on the domestic market on the day of payment, follows from the text of the document.
“For the purpose of fulfillment by the Russian Federation of government debt obligations denominated in government securities, the nominal value of which is indicated in foreign currency, the Russian Federation has the right to send to a non-bank credit institution that is a central depository an application for opening a foreign depository (without the personal presence of its representative ) accounts of the “I” type, which is maintained in rubles,” the text of the decree says.
The beneficiaries of these accounts will be Eurobond holders. Ruble payments on foreign currency debt will be considered “performed properly” without taking into account the opinion of those to whom these payments are intended, follows from the document.
Russia due to sanctions switched to servicing the public debt in rubles
After introduced for Russian invasion of Ukraine sanctions, Russia faced problems in paying its public debt in foreign currency. The reserves of the Russian Central Bank in Europe and the United States were frozen, and sanctions prohibited Western investors from dealing with the Russian Ministry of Finance, the Central Bank or the National Welfare Fund (NWF).
In early March, the US Treasury issued a temporary license, making an exception to the sanctions on payments on public debt. At the end of May, the US Treasury did not last this license. The Russian Ministry of Finance responded by saying that it would produce payments in rubles by analogy with calculationsfor gas.
Foreign investors will have to open foreign currency and ruble accounts in a Russian bank and issue foreign currency sale orders in order to receive payment of the government debt in the original currency. With the help of such a scheme, the Ministry of Finance expects to make payments bypassing the Western settlement infrastructure, explained Russian Finance Minister Anton Siluanov.
The Ministry of Finance has repeatedly stressed that Russia is not going to declare defaults on debt because the country has the funds to pay.
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