Russia Proposes a New System for Repaying Foreign Debt

Russia has stated that it may use a payment arrangement similar to that used for gas supplies to pay its dollar-denominated foreign debts. According to the Vedomosti Business Daily, Finance Minister Anton Siluanov stated on Monday that Russia will offer holders of its Eurobond obligations a payment system that bypasses Western Financial Infrastructure.

Previously, Russia offered natural gas customers the option of opening a dollar or euro account at Gazprombank, followed by a ruble account. The importer would pay the gas bill in euros or dollars and instruct the bank to convert the funds to rubles. The system aims to avoid the risk of gas payments being frozen as a result of Western sanctions imposed on Russia for its actions in Ukraine.

According to Siluanov, a similar mechanism will be established for Eurobond holders, with an offer to open foreign currency and ruble accounts at a Russian bank. "In payments for gas, we are credited with foreign currency and it's converted into rubles," Siluanov was quoted as saying. "The Eurobond settlement mechanism will work in the same way, just in the other direction."