BOFIT Viikkokatsaus / BOFIT Weekly 2019/44

At the end of September, Russia’s foreign debt amounted to 470 billion dollars, including about 60 billion dollars in short-term debt. This year Russia’s foreign debt has increased by 17 billion dollars, mostly due to rising government-sector borrowing. Non-bank corporate sector debt also rose, while banks continued to pay down debt.

The Russian government’s foreign debt at the end of September amounted to 65 billion dollars, its highest level in over a decade. Most of this year’s 20-billion-dollar increase in foreign debt came from ruble-denominated debt held by foreign investors. The Russian government has also issued roughly 6 billion dollars in eurobonds this year. Government borrowing is not essential; the federal budget continues to show large surpluses and excess earnings from oil have been set aside in the reserve fund. In the future, however, the issuance of foreign-currency debt by the government will be complicated by the US sanctions that went into effect at the end of August. The Russian government continues to hold little foreign debt, as it currently corresponds to about 4 % of GDP.

At the end of September, Russian banks still owed 74 billion dollars in foreign debt. However, banks have been actively reducing their bank debt since the 2013 peak of 214 billion dollars. Western sanctions are a key reason for banks paying down foreign debt so aggressively. The foreign debt of the non-bank corporate sector has increased slightly this year, standing at 322 billion dollars at the end of September.