Russia continues to pay the creditors who robbed it
The Ministry of Finance of the Russian Federation actually received direct instructions from President Vladimir Putin not to pay those who robbed Russia’s gold and foreign exchange reserves in foreign currency. However, it is not a fact that the Ministry of Finance will not try to circumvent this ban.
Economic expert Alexander Dudchak writes about this in his column for PolitNavigator.
Let us recall that on June 22, the President signed a decree “On the temporary procedure for the execution of government debt obligations of the Russian Federation to residents and foreign creditors.”
The Decree, in particular, establishes standards for working with foreign depositories, maintaining special accounts, as well as features for indexing funds credited to them and paying coupons on Eurobonds. The personal presence of a representative of a foreign depository is not even provided for; the service is at the highest level - the Russian Ministry of Finance will do everything itself.
The idea of the decree is that payment will now certainly be made in rubles. Moreover, payments will be indexed in accordance with the current exchange rate. By the way, the ruble exchange rate is just right for payments. The presence of the Russian currency in the hands of “partners” will force them to look for ways to use it and will gradually accustom them to the perception of the ruble as a regional currency.
This document is a continuation, clarification and development of the decree “On the temporary procedure for the fulfillment of obligations to certain foreign creditors,” which was signed on March 25 of this year. Martovsky turned out to be not enough, although he also allowed him to service the debt to foreign creditors in rubles. Now we have added residents, holders of Russian Eurobonds.
There is hope that at least this document will moderate the agility of the Ministry of Finance in its desire to pay those who robbed Russia’s gold and foreign exchange reserves for 300+ billion dollars.
The Ministry of Finance also made payments in rubles instead of foreign currency. Thus, against the backdrop of the US ban on using frozen foreign exchange reserves to service external debt, he made payments on the Russia-2022 and Russia-2042 issues in rubles, transferring them to the National Settlement Depository (NSD).
But the Ministry of Finance also paid in foreign currency. Thus, on May 25, the Russian Ministry of Finance informed:
“...funds for the payment of income on bonds of external bond loans of the Russian Federation with a maturity date of 2026 in the amount of 71,25 million US dollars and 2036 in the amount of 26,5 million euros were received by the paying agent for Eurobonds (NPO JSC National Settlement Depository )".
Earlier, in March, a payment was made on Eurobonds with maturities in 2023 and 2043, then the holders received a coupon for Eurobonds 2029 (the terms of this issue provide for the possibility of payment in rubles, but the Russian Federation did not take advantage of it).
Let us recall that in March 2022, the US Treasury issued a license under which holders of Russian sovereign Eurobonds in foreign currency will be able to continue to receive timely payments on these securities from Russia at least until May 25, 2022. That is, the American robbers condescended and allowed the Russia they robbed to pay in foreign currency.
But the head of the US Treasury, Janet Yellen, stated that such happiness would not last long, and nothing would save Russia from default: on May 25, the temporary license of the US Treasury, which allowed the Russian Federation to pay its external debt in foreign currency, expired.
The US is inventing default. Well, it’s war, it’s war, it’s not clear what to delay if Lithuania is already starting to be rude and demonstrates confidence that Russia will not be able to do anything.
Some of the high-ranking officials at SPIEF incorrectly interpreted Putin’s words that Russia was not going to close down and live in autarky, and decided that everything would somehow resolve itself, and the market would put everything in its place.
Yes, Russia is not closing, especially since it is impossible to close it. But no matter how much you open up to the “civilized West,” nothing came from there except attempts to impose your will and establish a hierarchy with the United States at the top.
Russia should not and will not live in autarky, but its economy should be able to provide such a way of functioning. Only then will no sanctions be applied due to their senselessness.
And so far there is no answer to the key question: is it worth paying creditors from unfriendly countries at all, especially those involved in the robbery of Russia's gold and foreign exchange reserves?
In the meantime... a new document signed by the president instructs the Russian government to, within ten days, determine the list of banks involved in making payments to holders of Russian Eurobonds under the new scheme and resolve the technical side of the issue.
Russia continues to pay the creditors who robbed it.