Russia warns of legal action if forced into sovereign debt default
Moscow says it will show proof of efforts to pay investors in roubles, foreign currency
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MELBOURNE • Russia will take legal action if the West tries to force it to default on its sovereign debt, Finance Minister Anton Siluanov told the pro-Kremlin Izvestia newspaper yesterday, sharpening Moscow's tone in its financial wrestle with the West.
"Of course we will sue, because we have taken all the necessary steps to ensure that investors receive their payments," Mr Siluanov told the newspaper in an interview. "We will present in court our bills confirming our efforts to pay both in foreign currency and in roubles. It will not be an easy process. We will have to very actively prove our case, despite all the difficulties."
He did not elaborate on Russia's legal options.
Russia faces its first sovereign external default in more than a century after it made arrangements to make an international bond repayment in roubles last week, even though the payment was due in US dollars.
Last week, Mr Siluanov said Russia will do everything possible to make sure its creditors are paid.
"Russia tried in good faith to pay off external creditors," he said yesterday. "Nevertheless, the deliberate policy of Western countries is to artificially create a man-made default by all means."
He said Russia's external liabilities amount to about 20 per cent of the total public debt of about 21 trillion roubles (S$364 billion). Of that, external liabilities are about 4.5 trillion to 4.7 trillion roubles.
Russia has not defaulted on its external debt since the aftermath of its 1917 revolution, but its bonds have now emerged as a flashpoint in its economic tussle with Western countries. A default was unimaginable until recently, with Russia rated as investment grade before its Feb 24 invasion of Ukraine, which on Sunday intensified in eastern Ukraine.
"If an economic and financial war is waged against our country, we are forced to react while still fulfilling all our obligations," Mr Siluanov said. "If we are not allowed to do it in foreign currency, we do it in roubles."
REUTERS
