Russia defaults on international debts after being cut out of financial system by Western sanctions
Russia yesterday defaulted on its international debts for the first time since the Bolshevik revolution after being unable to pay its creditors due to the impacts of Western sanctions.
Ratings agency Moody’s yesterday said Russia’s failure to make payments on two Eurobonds worth $100m officially constitutes a default after its extended deadline to make the payments expired.
The default comes as western sanctions, in response to the war in Ukraine, have effectively locked Russia out of the global financial system and prevented the country from paying debts in foreign currencies.
The sanctions resulted in Russia yesterday saw the country fail to repay its debts by the extended May 27th deadline after Russia was given an extra 30-days to pay two debts denominated in Euros and US dollars.
Speaking at the sidelines of the G7 summit in Germany, a US official hailed the default as a victory of western sanctions.
“This morning’s news around the finding of Russia’s default, for the first time in more than a century, situates just how strong the actions are that the U.S., along with allies and partners, have taken, as well as how dramatic the impact has been on Russia’s economy,” the US official said.
The default will however likely little immediate impact on Russia’s finances, due to the fact Russia is currently unable to borrow from international creditors and has sufficient income from its oil gas revenues anyway.