Russia threatens to pay foreign debts in rubles following sanctions

Russia is threatening to pay foreign debts in rubles after a number of Moscow’s top banks were sanctioned in response to the country’s invasion of Ukraine.

The Russian government is scheduled to pay $117 million on Wednesday for a pair of its dollar-denominated bonds, according to Reuters.

The Russian foreign ministry has accepted a temporary course of action that gives banks the ability to pay back debts, but it is now warning that whether or not those payments withstand depends on the sanctions, according to the news wire.

A number of Moscow’s top banks have been sanctioned as a result of Russia’s invasion of Ukraine. Last month, the Treasury Department banned financial dealings with the Bank of Russia and the Russian foreign investment fund, and the White House announced that the U.S. and its allies would oust certain Russian banks from the SWIFT international banking system.

If the payments cannot go through, the finance ministry said it would repay Eurobonds in rubles, according to Reuters, which has plummeted to record lows since Russia’s invasion.

Russian Finance Minister Anton Siluanov wrote in a statement on Monday that Moscow has “the necessary funds to service our obligations.”

“Claims that Russia cannot fulfil its sovereign debt obligations are untrue,” he added, according to Reuters.

Siluanov also said “the freezing of the central bank and government’s foreign currency accounts can be seen as a desire from several Western countries to organise an artificial default,” according to Reuters.

Moscow’s threat comes in the third week of Russia’s invasion of Ukraine, which has triggered sanctions from Western allies — penalties that are sparking economic turmoil in Russia.