The OFAC license, which allowed transactions necessary to receive payments on debt obligations of the Ministry of Finance of the Russian Federation and the Bank of Russia for a period up to May 25, will not be extended.
The license, which allowed servicing the sovereign dollar debt attracted until March 1, 2022, was issued almost immediately after the introduction of tough anti-Russian sanctions. The fact that it will most likely not be extended, Bloomberg reported last week, citing sources. This was later confirmed by the Head of the US Treasury Janet Yellen.
“No final decision has been made yet, but it would be reasonable to assume that the license will expire,” Yellen said.
In turn, Russian State Duma Speaker, Vyacheslav Volodin, said that after the US decision not to renew the license to service Russia’s external debt, the country intends to make payments on it in rubles.
“We will pay in rubles. This is a meaningful choice of the USA. They themselves have banned payments in dollars. Today, the ruble has significantly strengthened, and in this sense, a good market situation has developed for us. Moreover, we have experience in mutual settlements in rubles. The gas contracts have shown this. And the USA and the satellites supporting their decisions, should get used to the ruble,” Volodin stated.
The US Treasury announced that the US decided to terminate the validity of the general license, which allows Russia to make payments to service its national debt. The document became invalid on May 25 at 12.01 am East Coast time (7.01 am Moscow time).
The Chairman of the State Duma also said on May 24 that the committees on the financial market and on budget and taxes will have to study the possibility of a complete cessation of payments on foreign debt against the background of the freezing of Russian assets. This proposal was made by the deputy from the Communist Party of the Russian Federation Nikolay Kolomeitsev.
Earlier, the possibility of servicing the country’s external debt in rubles was stated by Finance Minister Anton Siluanov. He warned that the country is not going to default, but if Western structures are closed for payments in foreign currency, they will have to be carried out in rubles.