While the European Union has announced new sanctions against Moscow, the United States, which until now has allowed the Russians to access funds to pay their debt in dollars, has reversed its decision. This raises the risk of default of payment from Russia.
The decision came from the US Treasury. Since Tuesday, April 5, Russia has been prevented from honoring its debt payments from its dollar accounts located in the United States.
Washington wants to increase the pressure on Moscow, while the payment deadlines on its debt are linked. On Monday April 4, Russia was due to make a payment of more than $552 million on a bond that matured and pay an $84 million coupon on a sovereign bond maturing in 2042.
Risk of technical default
The maneuver could force Moscow to choose between locking up its dollar reserves to pay its debt and support the war effort, according to a US Treasury spokesman. There is therefore a risk of technical default on the part of Russia.
Because the country has the means to pay. Its gold and foreign exchange reserves amount to 640 billion dollars, part of which is on deposit abroad and frozen. But Russia could still tap into it to pay its debt. This is no longer the case now, and with the package of measures that are announced in Europe. Russia could also see its gas revenues and oil drop.
►Also read: Sanctions against Russia: “We must go further and hit Putin’s assets”