September 26, 2022


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Bankructwo Rosji staje się coraz bardziej realne. Czym jest techniczne bankructwo o którym mówi się coraz głośniej? Testem dla tej prognozy mają być dzisiejsze wydarzenia: rząd Rosji musi spłacić swoim wierzycielom ponad 100 mln dolarów z tytułu dwóch obligacji denominowanych w amerykańskiej walucie. W odpowiedzi na zachodnie sankcje rząd w Moskwie postanowił, że wypłaty będą realizowane wyłącznie w rublach. O finansowym aspekcie wojny rozmawialiśmy w radiu RMF24 z Przemysławem Kwietniem - głównym ekonomistą X-Trade Brokers.

Is Russia’s artistic bankruptcy a bogeyman for the Kremlin? The expert explains

Russia’s bankruptcy is becoming more and more realistic. What is technical bankruptcy being talked about the most? Today’s events will test these expectations: the Russian government will have to repay its creditors more than $100 million in bonds denominated in the US currency. In response to Western sanctions, the government in Moscow decided that payment should be made only in rubles. We talked about the financial side of the war on RMF24 radio with Przemysław Kwiecień – Chief Economist at X-Trade Brokers.

Bogdan Zalosky, Radio RMF24: How can creditors who receive rubles instead of dollars react? What could happen then? They will say in a handful of rubles is better than a dollar on the roof?

Przemyslav Kojic: no. Instead, they won’t say anything, because they most likely won’t get anything. This is due to the fact that today Russia is not able to pay this interest, either in dollars or simply in rubles, because these amounts are not very large, that is, 117 million dollars, I think.

This is the first slide, isn’t it?

no. This isn’t a chip, it’s an interest payment. Bonds issued by governments in general. Also the Polish government.

Russia is threatened with technical bankruptcy. what do you mean?

I spoke about these slides inaccurately because I read that the following payments are due on March 31, i.e. $359 million, and on April 4 – $2 billion.

This is due to the fact that there are different standards for the so-called bonds and they have payments at different times. However, the point here is that because of the sanctions, it will not be technically possible to pay the interest, since most financial operations with the Russian government, the Central Bank, with the largest institutions have been frozen. Even as I said, I consider it more political, in the quote he refers to the threats “we will pay you in rubles”, and, perhaps, it will not be possible to implement either.

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And this “technical bankruptcy”, this scenario. How does it look?

It will simply be that these payments will not come into effect, that’s all. This is already considered bankruptcy, but beyond that, what does that mean in practice? There is no such clear answer here, because there is not a single institution in the world that says well – there was bankruptcy. Perhaps it can be judged by the credit rating agencies or the court may decide to do so, but this usually does not happen.

Let’s add that there have already been such stories. Greece is an example of a technically bankrupt country.

Yes and no. Greece, in a sense, was de facto bankrupt, that is, it was not able to service its debts, while in the case of Russia there is a completely different story than it has always been in such cases. There have already been many bankruptcies. Even Poland went bankrupt in the 1980s.


We had some other failures in Latin America. However, it is usually so that a country is not able to pay its debts anymore, simply because it does not have a foreign currency. His financial situation is already so bad that he is unable to repay this debt. This is a problem for this country, because later returning to the financial markets with new emissions in order to finance itself is complicated. It usually requires several years of rebuilding, at least rebuilding its credibility.

We are talking about currencies, Russia has the fourth largest gold resource in its treasury. Can you use it to get around these penalties?

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Not right. Because it will have to sell gold for foreign currencies. As I say again, the problem of Russia today is not that it does not have foreign currency, because it still has foreign currency, and not all assets of the Central Bank have been frozen. Russia is constantly receiving foreign currency for the sale of some raw materials. Exports haven’t completely stopped either, so it’s not as if Russia has to reach for gold to pay interest on bonds. It is more about the technical possibility of imparting this benefit. Russia is in an unusual situation, had it not been for what happened over the past month, it would not really need this foreign money so much. Russia is a highly indebted country because it is a net exporter. It’s been a net source for years and still is. Raw materials have a huge scale.

A question that has been bothering me for a long time, because we still have, in fact, the dominance of the dollar, and the “Wall Street Journal” reports that the world’s largest oil importer – China is planning to switch to settlements in yuan with Saudi Arabia for oil transactions. This is another such indication. What does that mean for the global economy, for the primacy of the United States?

This is a slow process. In general, for Saudi Arabia something like this, it is also not an easy decision, because something still needs to be done with this yuan. Here rather an obstacle. This is not an obstacle to the launch of payments, but later Saudi Arabia will have reserves in yuan, which may not necessarily be very attractive for it at the moment. However, for China is the so-called without thinking. Given how the financial world has reacted to Russia today, it is clear that it is China that has its own strategic goals opposite to those of the United States in many cases. They do not want to be in a position where their financial situation can somewhat – rather resemble – the situation in which Moscow is today.

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Saddam Hussein once wanted to make a similar move. He wanted to switch to euros from dollars when it came to oil and gold.

no. However, this is a slightly different story. It was more than a sword swing. However, in the case of China, it is already a long-term strategic goal, and China will – in my opinion – want to build a group of friendly and allied countries that are willing to develop in such an ecosystem of the yuan. And in the long run, at this point, he’s off the dollar.

But this is a slightly different topic. Many thanks for the explanations, for this conversation. Przemyslav Kojic, Chief Economist at X-Trade Brokers, was a guest on RMF 24 Radio.