Russia defaults on foreign debt for first time since 1918: What to know

A man stands in front of a currency exchange office in St. Petersburg on June 22. (Anatoly Maltsev/EPA-EFE/Shutterstock)

Russia has defaulted on its foreign currency debt for the first time in more than a century, as tough Western sanctions designed to punish Moscow for invading Ukraine restrict its ability to pay overseas creditors.

The country has the cash but is unable to get it to creditors because sanctions have cut Russia out of international payment systems. A deadline for an overdue $100 million interest payment expired Sunday. Russian President Vladimir Putin had proposed paying creditors in rubles, which could then be converted to dollars, after the U.S. Treasury Department closed a loophole that had allowed the Kremlin to make debt payments owed to American bondholders through American banks.

Russian senator Vladimir Dzhabarov rejected reports of the default on Telegram, calling the West hypocritical and accusing Western banks of stealing huge amounts of Russian money.

The debt default adds to Moscow’s growing isolation from the global economy and could tarnish its reputation among financial investors in a way that potentially takes years to repair, political experts say, as investors worry Russia will continue to put its foreign policy interests ahead of its creditors.

U.S. pushes Russia toward default by blocking debt payments