Russia made what appeared to be a late U-turn to avoid default on Friday, as it made a number of already overdue international debt payments in dollars despite previously vowing they would only be paid in roubles.

Whether the money would make it to the United States and other western countries that sanctioned Russia was still not clear, but it represented another major twist in the game of financial chicken that has developed about a possible default.

Russia’s finance ministry said it had managed to pay $564.8 million on a 2022 Eurobond and $84.4 million on a 2042 bond in dollars – the currency specified on the bonds.

The ministry said it had channeled the required funds to the London branch of Citibank, one of the so-called paying agents of the bonds whose job is to disburse them to the investors that originally lent money to Moscow.

Russia has not had a default of any kind since the financial crash in 1998 and has not seen a major international or ‘external’ market default since the aftermath of the 1917 Bolshevik revolution.

The risk of another one though is now a flashpoint in the economic tussle with western countries which have blanketed Russia with sanctions in response to its actions in Ukraine that Moscow has termed a “special military operation”.

The bonds were originally supposed to be paid earlier this month but an extra 30-day grace period that government bonds often have in their terms meant Moscow’s final deadline was May 4.

Published in The Express Tribune, April 30th, 2022.

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