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What are the key dates for Russia to pay its state bonds?

Russia is close to defaulting on its foreign debt of $36.5 billion. How can they repay the sum in their current economic crisis?

The Kremlin's Spasskaya Tower and St. Basil's Cathedral are seen through the art object in Zaryadye park in Moscow, Russia March 15, 2022.
Evgenia NovozheninaReuters

Russia claimed on Thursday that it had made the first of its debt interest payments that it must fulfil to stave off its first external debt default since 1917. The first payment, of $117 million, has been paid, according to the Russian government, but there are doubts remain over how Russia can wield its foreign reserves while under stringent sanctions by much of the west.

Citigroup, the London-based recipient of the money, is thought to not yet have accepted the payment. If the payment is still not fulfilled after a 30-day period, then Russia will default.

This payment is not the only outstanding debt, and there are more hurdles for Russia to leap over before the danger of an external debt default is averted.

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What other payments are there?

The Russian government has four more payments due in the next two months alone, alongside the one that was or was not paid on Wednesday March 16. News agency AFP has produced a useful graph which demonstrates when these upcoming payments will be.

Chart showing the dates of interest payments Russia needs to make in the next two months.
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Chart showing the dates of interest payments Russia needs to make in the next two months.AFP

The next two weeks will prove crucial as more than $500 million of debt has to be paid off. Russia has a sizeable foreign reserve which in normal times would have no problems paying this relatively small amount of cash. However, the Russian invasion of Ukraine has complicated the situation.

Why might Russia find it difficult to pay?

There are a multitude of sanctions that have struck the Russian economy in the wake of its war on Ukraine. In terms of external debt, the most debilitating is the freezing of money in accounts outside of Russia. This makes it much more difficult for Russia to access its foreign reserves.

Around half of Russia's $640 billion of foreign reserves are frozen under the sanctions. Having these reserves out of reach could make some of these payments nigh impossible. While some of the debts have clauses that mean they can be paid in roubles, many do not. Even if the payments are paid in roubles, there are no guarantees that investors will receive the money due to the sanctions. The rouble is losing value every day.

But a loophole has been left in the US sanctions that should enable Russia to pay its debts. They stipulate that US investors can continue receiving interest payments from the Russian finance ministry or central bank until May 25. Despite this, Russia's finance minister, Anton Siluanov, told state media RT that Russia had paid, but that the "possibility or impossibility of fulfilling our obligations in foreign currency does not depend on us."