Credit agency: Russian state may go bankrupt soon

According to the credit agency Fitch, if Russia does not pay its foreign debt in dollars due on Wednesday, the country could go bankrupt in 30 days.

Thus, lenders who have already seen investments in Russia shrink in value will receive an important signal when the payment deadline expires, Bloomberg writes. The amount corresponds to just over NOK 1 billion.

Sanctions affecting Russian banks and the blocking of Russia’s accounts abroad can make it difficult to repay the debt. The Kremlin has also indicated that it can pay in rubles, which will also be considered a default, Reuters writes.

Large foreign exchange reserves

Before the war, Russia had nearly USD 650 billion in foreign exchange reserves and oil revenues of several hundred million dollars a day.

The country’s outstanding financial obligations in rubles can also lead Russia into state bankruptcy, i.e., a position where it can’t service its debt. 

The country has two weeks left to handle its government obligations in rubles, Fitch writes in a document.

A throwback to 1918?

If Russia does not meet its obligations by April 1, it will be the first time since 1998 that the country did not pay its ruble debt on time. The last time it did not pay what it owed in foreign currency was in 1918, in the wake of the communist revolution.

Fitch recently downgraded Russia’s credit rating from B to C, which places Russian bonds in the “junk status” category. That suggests that non-payment of government debt may be imminent.

Source: © NTB Scanpix / #Norway Today / #NorwayTodayNews

Do you have a news tip for Norway Today? We want to hear it. Get in touch at [email protected]