Russia can’t use nearly half of its R9.6 trillion war chest due to Western sanctions
- Russia’s finance minister has admitted that almost half of the country’s foreign currency reserves are unusable.
- Anton Siluanov said in an interview on state television that $300 billion (R4.5 trillion) of Russia’s $640 billion (R9.6 trillion) reserves had been frozen by the penalties.
- Russia’s foreign reserves are seen as a crucial tool in countering Western economic sanctions.
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Russia’s finance minister has admitted that the country cannot use nearly half of its foreign exchange reserves, which are seen as a crucial tool in countering Western economic sanctions.
In an interview on Russian state television on Sunday, Anton Siluanov said Russia held approximately $640 billion (R9.6 trillion) in foreign exchange reserves, and approximately $300 billion (R4.5 trillion) of this amount has been frozen under US sanctions, Europe and other Western countries, according to a report by Interfaxthe independent Russian news agency.
Western nations have applied harsh penalties aimed at crippling the Russian economy after the invasion of Ukraine. The first wave of sanctions targeted Russia’s central bank and its foreign exchange reserves, inhibiting Russia’s ability to support its economy and finance its war.
According to Bloomberg, which quoted figures from the country’s central bank. A further 32% of foreign exchange reserves were held in euros.
Russia’s relations with China remain a bright spot for the Kremlin. However, in his Sunday interview, Siluanov noted that Western countries are “pressured” on Beijing to restrict Russia’s use of its yuan-denominated reserves, which accounted for 13% of its foreign exchange reserves in June. from last year.
“Certainly the pressure is mounting to restrict access to the reserves that we have placed in yuan,” Siluanov said, according to Interfax. “But I believe that our partnership relations with China will nevertheless allow us to maintain the cooperation that we have achieved, not only to maintain it but to multiply it in an environment where Western markets are closing.”
China has not publicly condemned Russia’s war with Ukraine or called it an invasion.
According to Interfax, Siluanov reiterated on Sunday that Russia would pay its foreign currency sovereign debt in rubles until it can access its international reserves.
“I think it is quite fair to say that we are not refusing to meet state obligations, we will pay them in rubles until our foreign exchange reserves are unfrozen,” he said. said, citing the need to pay for “critical imports” such as food and medicine.
The ruble has plunged since the invasion of Ukraine. It is down about 40% against the US dollar since the start of the year.
There are growing fears that Russia could default on its debt.
On Sunday, International Monetary Fund Managing Director Kristalina Georgieva told CBS “Facing the Nation” that “in terms of debt service, I can say that we no longer consider Russia’s default as an unlikely event”.
Russia’s gold reserves are also under surveillance. A bipartisan group of US senators has proposed legislation that would block Russia from gaining access to its Gold stock of $132 billion (R1.9 trillion), Axios reported Tuesday. Central Bank of Russia has stepped up its gold buying since invading Ukraine.