Russia refuses dollar debts

Russia refuses dollar debts

The role of the dollar in Russia's external debt has reached 60%, declining to a minimum since 2014, according to the Russian Central Bank's data, published today.

A stable decline in the share of the dollar has been observed since the beginning of 2016 - its share declines quarterly by 1-2%. As of January 1, 2016, the share of the dollar was 68%.

The share of the euro or other foreign currencies in the debt structure has been stable in the last two years - 12-13% and 3-4% respectively. As of January 1, 2016, the ruble's share was 16%, according to the latest data, it increased to 23%.

In the first quarter of 2015, the share of the dollar was 51% in the government bodies' loans, in 2016 - 43%, and according to the latest data - only 28%.

The Central Bank is an exception to the general rule on reducing the role of the dollar - for the first quarter it sharply increased the dollar component in external debt: on April 1, the share of the US currency in its debt structure was 23%, although three months earlier it was at 7%.

The orientation of the government to the ruble has increased by one and a half times for two years - now the share of Russian currency in external loans of the state is 70% instead of 45% in the first quarter of 2015. About 60-70% of the banks' external debt are in dollars, 12-13% - in euro and about the same in rubles, according to the Central Bank.

Russia's Deputy Foreign Minister Sergei Ryabkov said earlier that Russia will speed up work on reducing its dependence on U.S. payment systems and the dollar as a settling currency in response to U.S. sanctions.

The head of the finance, monetary circulation and credit department at RANEPA, Alexander Khandruev, speaking to Vestnik Kavkaza, noted that it is primarily connected with the effect of sanctions. "Borrowings in dollars are limited now, in addition, the total volume of the dollar component in loans extended by banks is declining - against this background, the share of dollar loans is decreasing. But it changes nothing in substance, because international money turnover is served by primarily reserve currencies, where the dollar is dominant," he pointed out.

In addition, according to the expert, there are other reasons. "The statistics reflect the higher activity of the Ministry of Finance on the issue of ruble bonds. In addition, the Central Bank estimates the foreign debt by the residence criterion, as ruble bonds are bought and held by foreigners, the share of the ruble component in external debt is being slightly increased. But the main reason is sanctions," Alexander Khandruyev listed.

The director of the Institute of International Economics at the Russian Academy of Sciences, Ruslan Grinberg, in turn, expressed confidence that Russian companies and the state sector are also refusing dollar loans for political reasons. "It is not connected with the current sanctions directly, only indirectly due to the increased sanctions pressure, but they could not lead to a policy change," he believes.

The expert explained the refusal from the dollar by the need to diversify debts. "Public debt, as accumulation of budget deficits, should be diversified, if possible, so that there will be no distortions in both internal and external debts. In addition, domestic debt causes less risks, which is better for the economy," Ruslan Grinberg concluded.

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