Russia’s Finance Minister Anton Siluanov told state media Russia Today that the country had met its obligations to creditors. But “the possibility or impossibility of meeting our obligations in foreign currency is not up to us,” Siluanov warned, according to RT, warning that payments may not take place if the United States refuses it.
“We have the money, we paid, now the ball is in America’s court,” he said.
A Treasury spokesman said the United States would allow the payments to go through.
The two coupons Russia will have to pay on mature dollar-denominated Eurobonds serve as the first test of Russia’s ability to pay off its debt while the world imposes heavy sanctions on its economy.
If the US withheld payments, Russia said it would try to pay in rubles instead of dollars. But that action could constitute a default, Fitch Ratings said on Tuesday.
It highlights the crisis Russia is in: the nation has the money to pay off its debts. According to Siluanov, after the West imposed unprecedented sanctions on its foreign reserves of about $315 billion, it cannot access nearly half of those funds.
If the Russian government defaults, investors’ losses could begin to mount.
Western investors are less exposed to Russia than before. Sanctions following the annexation of Crimea in 2014 have already encouraged them to reduce their exposure. But international banks owe about $121 billion to Russian entities, according to the Bank for International Settlements.
JPMorgan estimated that at the end of last year Russia had about $40 billion in foreign currency debt, about half of which was with foreign investors. So a default would be bad news for Russia, which would have to meet its obligations in its practically worthless currency, lacking access to foreign financing. But global markets probably won’t suffer much.
More payments to come soon. The huge $2 billion payment, scheduled for early April, could spell an even bigger headache for Moscow.
— CNN’s Lindsay Isaacs, John Harwood and Julia Horowitz contributed to this report