(Bloomberg) — President Vladimir Putin banned all Russian residents from transferring hard currency abroad, including for servicing foreign loan contracts, potentially putting much of the country’s $478 billion in external debt at risk of default.
Most Read from Bloomberg
The steps, which take effect March 1, are part of a package of retaliatory measures for U.S. and European sanctions over his invasion of Ukraine. They also include restrictions on companies buying back their own stock, according to the text of the decree published Monday. It wasn’t clear if the new rules applied to sovereign debt and if they constituted default.
The U.S. and its allies have imposed sweeping sanctions on Russia’s biggest banks, including the central bank, and limits on billionaires and top officials including Putin himself for the invasion of Ukraine. The moves triggered a sharp drop in the ruble and forced the central bank to take emergency steps to stabilize the market.
Since the first rounds of sanctions in 2014, Russian banks and companies deleveraged significantly, with the Institute of International Finance estimating the country’s liabilities have fallen by $250 billion. Of the total in external debt, $135 billion is due within one year, according to the IIF.
Putin came to power shortly after the Russian government defaulted in 1998 on $40 billion of domestic debt, the bulk of which was held by foreign investors. Helped by years of rising oil prices, Russia was able to cut borrowing and paid off its remaining debt to the Paris Club of creditors ahead of schedule.
The Kremlin provided no other immediate explanation and neither the Finance Minister nor the central bank responded to requests for comment.
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
