Bloomberg: US plans to ban Russiaʼs debt payments from May 25, which will lead to default

Oleksiy Yarmolenko

The United States has no plans to extend a special permit for Russia to service its foreign debt in dollars. This permit will expire on May 25.

This was reported by Bloomberg, citing its own sources.

Ending this special permit will not allow Russia to make payments on its debts, as international banks will not accept payments due to sanctions. This will lead to the actual default of Russia.

At the same time, there are some officials in the US Treasury Department who are proposing to extend the special permit so that Russia can spend its foreign exchange reserves on public debt service and not on war. But the White House is leaning toward a tough default scenario. The final decision has not yet been made.

On May 27, Russia will have to make regular payments on foreign debt in dollars. If it does not do so or tries to do so in another currency, a 30-day grace period will be launched in order for Russia to make the payment. After 30 days there will be a default.