Putin signed a decree on how Russia can avoid default
Strong argument in the international court
Vladimir Putin has established a new procedure for payments on public debt: the President of Russia signed a Decree on the temporary payment of external foreign currency debt in rubles. Why is this good for domestic investors and what is fraught with for foreign ones, lawyer Andrey YURYEV explained.
– A month ago, the United States canceled the general license that allowed Russia to make payments to service its external debt.
– Yes, and then the Ministry of Finance proposed to implement the scheme that is now used for gas payments – with payment in rubles . Actually, Putin's Decree legalized this scheme legally.
– Not really. To fulfill obligations under Eurobonds, Russia can open ruble accounts in the name of foreign investors, they will receive coupon income for bondholders, but they will not be able to withdraw this money abroad, to unfriendly countries.
– Yes, residents can, and before that they also could not get their money.
– It will be made at the exchange rate of bonds, which is formed in the domestic foreign exchange market in Russia.
– In fact, we are money we pay creditors, and it is not our fault that they cannot use them abroad. In Russia, please, let them spend. I think that this mechanism (payments on Eurobonds in rubles), legally enshrined in the Decree of the President of the Russian Federation, will be a good reason in the international court in the event of a default being declared on our country and our property in the West being arrested.