Putin signs decree to prevent defaults

Russian President Vladimir Putin established a temporary procedure for the execution of state guarantees in foreign currency. Moscow will be able to execute assumed guarantees in Russian rubles even without the consent of the recipient of the funds.

The explanatory note to the draft decree says that the new measure is aimed at preventing a technical default in the event of warranty cases under state guarantees.

In accordance with Putin's decree, the fulfillment of obligations under Russia's guarantees in foreign currency will be carried out in rubles with recipient's consent. They will be transferred either to the recipient's account or to a Russian bank account owned by a third party (only a Russian legal entity).

In the event there is no сonsent to receive payments in Russian rubles under state guarantees, they will still be executed in the Russian national currency if making payments in foreign currency deems impossible. According to the document, the funds will be transferred to a ruble bank account opened at the request of the Russian Ministry of Finance in the name of the beneficiary in an organization performing the functions of a government agent on the provision of state guarantees (currently — VEB.RF).

The draft document was published in February 2023. The document says that the temporary procedure was introduced against the backdrop of the current geopolitical situation, in which Russia's possibilities to fulfill state guarantees in foreign currency were significantly limited.