The United States is expected to let Russia’s debt payment license expire today, potentially putting Moscow closer to defaulting on
The United States is expected to let Russia’s debt payment license expire today, potentially putting Moscow closer to defaulting on its debt.
Russia has not reneged on its external debt in over a century. Since the Ukrainian invasion, the country has managed to make its international bond payments despite Western sanctions prohibiting transactions with Russia’s finance ministry, central bank or national wealth fund.
If the US lets the license expire, Russia will struggle to make bond payments which are due on June 24. The country is expected to have nearly $2 billion worth of external sovereign payments to make before the end of the year.
The US Treasury Department determined that letting the license expire would not pose a serious threat to the stability of the financial system as most holders of Russian bonds are in Europe. Additionally, opponents to the decision, predominantly US investors, are concerned about the harm they will face, and many have argued that extending the exemption would likely prompt Russia to drain its funds to make debt payments. Despite opposition, the move will likely occur as investors have had ample time to adjust to Moscow’s exclusion from the global financial system.
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