Putin orders to switch into Russian rubles in foreign debt payments

Russian President Vladimir Putin signed a document establishing a new procedure for Russia to make payments on external foreign currency public debt.

The Decree "On the temporary procedure for the execution of public debt obligations of the Russian Federation to residents and foreign creditors, expressed in government securities, the nominal value of which is indicated in foreign currencies" was published on the official website of legal information.

From now on, in order to fulfill its obligations under Eurobonds, Russia can open ruble accounts in the name of foreign depositories to fulfill its obligations under Eurobonds. Securities holders and "other persons" as specified by the Ministry of Finance and the Central Bank act as beneficiaries of these accounts.

The amounts credited to these accounts shall be adjusted as per the exchange rate of the bonds on the domestic foreign exchange market in Russia.

In late May, the United States terminated the general license allowing Russia to make payments to service its national debt. Finance Minister Anton Siluanov then announced that Moscow was preparing to implement ruble payments for natural gas supplies.

"Here is how gas payments are made in rubles. We receive payments in foreign currency, foreign currency is then exchanged for rubles on behalf of the gas buyer, and this is how the payment takes place. The Eurobond settlement mechanism will work the same way, albeit in the other direction,” the minister explained.