Economic experts have estimated that Russia may start its path towards insolvency as early as next Wednesday, due to its obligations to pay in dollars the interest on government bonds, and the government’s insistence in Moscow to do so in rubles.
The IMF’s chairman, Christina Georgieva, said in an interview earlier this week that the fund’s experts “no longer think a Russian bankruptcy event is an impossible one.” “.
On Wednesday, Russia is expected to pay an estimated $ 117 million as a yield to holders of its annual bonds. Unlike other bonds, according to investment bank JPMorgan, the yield on these bonds must be given in dollars, and can not be made in rubles, the Russian currency that collapsed in recent weeks.
Russia’s finance minister said in a television interview on Sunday that it would be “perfectly fair” to pay interest in rubles, due to the fact that Russia’s central bank’s foreign exchange and gold reserves were actually taken out of use by Western economies. She has another month to do them.
According to economists, Russia’s debate and possible refusal to pay the yield in dollars could lead it to a fast track that ends in insolvency, for the first time in the country since 1998. “We have to pay for critical imports, food, medicine, essential commodities,” the Russian finance minister said in an interview. To television, “but the unfriendly countries have limited our ability to use our foreign exchange reserves … we will pay in rubles.”
Georgyeva said in an interview with American television that “regarding (Russia’s) debt payments … we no longer believe that insolvency is an impossible event,” noting that international sanctions actually prevent Russia from using much of the estimated gold and foreign exchange reserves it has accumulated over the past decade. More than $ 600 billion. The United States and Europe have banned operations with the Russian central bank. The Russian finance minister estimated that half of the currency reserves are unavailable.
The consequences of Russian insolvency are unclear. According to Georgiev, even if Russia goes bankrupt, it will not lead to a global economic crisis, in part because global banks ‘and governments’ exposure to Russian bonds is estimated at $ 120 billion, an amount “systemically irrelevant,” she said. The country intends to act and increase the Chinese currency reserve already in the possession of the Russian central bank, thereby allowing imports.