Russia defaulted on its sovereign foreign-currency debt for the first time since 1918, the culmination of US and EU economic sanctions that made it impossible for the country to make payments to foreign creditors.
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For several months, the Russian Federation has been finding ways to circumvent the restrictions imposed after the Kremlin’s invasion of Ukraine. But at the end of the day on June 26, the grace period for about $100 million in interest payments expired. The fact of non-payment of interest on the debt by the deadline is considered an event of default.
“The default is a symbolic event. The Russian government has already lost the ability to issue dollar-denominated debt. Already, Russia cannot borrow from most countries,” said Takahide Kiuchi, an economist at the Nomura Research Institute in Tokyo.
During the Russian financial crisis and the collapse of the ruble in 1998, President Boris Yeltsin’s government defaulted on its $40 billion domestic debt. The last time Russia defaulted on its foreign creditors was over a century ago, when the Bolsheviks abandoned the debt burden of the Russian Empire in 1918.
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