(CNSNews.com) - Russia has defaulted on its sovereign debt for the first time in over a hundred years, due to sanctions that restrict their access to international banking systems. On May 27, Russia was due to pay approximately one hundred million dollars to foreign investors, but missed the deadline and was given a 30-day grace period to pay off the debt. That grace period expired Sunday night.
The default had been widely expected since Russia missed the payment deadline in late May. Unusually, Russia had both the means and the will to pay off these debts, but still experienced its first default on foreign debt since 1918, shortly after the Russian Revolution.
Russia, which is still profiting off of the high price of oil, has attempted to transfer money to a foreign bank, then disburse those funds to investors. But, investors were unable to get the money because of sanctions imposed by the West, due to Russia’s invasion of Ukraine.
The situation has left investors holding Russian debt unsure of how to collect the money that they are owed.
For now, the default appears unlikely to have any significant effect on the Russian economy. When compared to Russia’s larger issues, “double digit inflation and the worst economic contraction in years,” the problem of the default is “mostly symbolic,” Bloomberg reports.
Russia invaded its neighbor and former Soviet republic Ukraine on February 24 of this year. Russia’s President, Vladimir Putin, cited “demilitarization” of Ukraine as his primary goal in what he termed a “special military operation.” The decision caused a rapid stock market crash and a spike in energy prices.
In retaliation for the invasion, the European Union agreed to a number of sanctions that have damaged the Russian Federation’s economic prowess. Most notably, the bloc of western nations agreed to ban more than two-thirds of all Russian oil imports to the European Union.