Russia floats new foreign debt payment system

Russia says it may use an arrangement similar to that used for payments for its gas supplies to pay its dollar-denominated foreign debts. The Vedomosti business daily on Monday quoted Finance Minister Anton Siluanov as saying that Russia will offer the holders of its Eurobond obligations a payment system bypassing Western financial infrastructure.

Russia previously has offered natural gas customers to establish an account in dollars or euros at Gazprombank, then a second account in rubles. The importer would pay the gas bill in euros or dollars and direct the bank to exchange the money for rubles.

The system aims to avoid a risk of payments for gas being frozen as part of Western sanctions against Russia for its actions in Ukraine.


Siluanov told Vedomosti that a similar mechanism will be set for Eurobond holders, with an offer to open foreign currency and ruble accounts at a Russian bank.

"In payments for gas, we are credited with foreign currency and it's converted into rubles," Siluanov was quoted as saying. "The Eurobond settlement mechanism will work in the same way, just in the other direction."