Rating agencies and economists warn against Russia’s default. The country can pay off the debt. But do you want it?
Next Wednesday will be very exciting for the financial markets in two ways. On the other hand, the US Federal Reserve is meeting on this day and as expected it will raise interest rates. And secondly, the relatively small amount of about 100 million US dollars in interest payments is owed to Russia on this day. This will show whether Russia is ready to repay its debts abroad. Economists, such as the head of the German DIW Institute, Marcel Fratzcher, see Western investors as somewhat black.
German news agency DPA reported that Fracher considers the bankruptcy of Russia’s national debt highly likely. According to Bloomberg financial news service, Russia owes 45 billion euros to the West. “We see default as a possible scenario,” US investment bank Morgan Stanley told its clients on Monday. Bloomberg quotes former hedge fund manager Jay Newman as saying, “I would be shocked — totally shocked” if Russia didn’t run out of debt repayment time.
Only 15 percent of the national debt
Vasily Astrov, a Russian expert at the Vienna Institute for International Economic Studies (WIIW), was not surprised, nor did he talk about the state’s bankruptcy. It would be more than a “selective state bankruptcy,” he says in an interview with the Press. Because the question is not whether Russia is able to repay its debts, but whether it wants to. Russia’s national debt is down 15%. And the “National Welfare Fund” in which Russia stashes its oil and gas earnings is swelling. $640 billion, equivalent to a tenth of Russia’s economic output.
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