US Treasury Secretary: "No Declaration of Sovereign Debt Default"

Vladimir Putin, President of Russia [Image source=Yonhap News]

[Asia Economy Reporter Jeong Dong-hoon] On the 18th (local time), the Russian Finance Minister stated that if the United States forcibly blocks the repayment of principal and interest on Russia's foreign currency-denominated bonds, Russia will repay its debt in its national currency, the ruble.

According to TASS news agency, Finance Minister Anton Siluanov made this remark at a forum regarding the possibility of Russia's sovereign debt default.

Minister Siluanov explained, "Russia does not plan to declare a default," adding, "Even if Western institutions (debt repayment intermediaries) are shut down, we will be able to make payments in rubles."

However, ruble repayment on foreign currency-denominated bonds issued by Russia could be considered a default, leaving room for potential issues.

The Office of Foreign Assets Control (OFAC) under the U.S. Department of the Treasury reportedly is considering not extending the waiver on sanctions against Russia that allows Russia to repay principal and interest on government bonds to U.S. creditors, which expires on the 25th of this month.

The U.S. Treasury Department has banned all transactions with the Russian Ministry of Finance, Central Bank, and sovereign wealth fund since Russia launched its "special military operation" in Ukraine at the end of February. However, a grace period was granted until May 25 to receive bond principal and interest payments, as well as stock dividends.

Russia must fulfill its interest payment obligations on dollar and euro-denominated government bonds maturing in 2026 and 2036 by the 27th of this month.