Default in Russia in 2025: to wait or not to wait
Posted: Wed Feb 19, 2025 6:51 am
Default in the economy means the inability of an enterprise to financially meet its debt obligations. Accordingly, on a national scale, this is a violation of the country's solvency and the inability to pay off government debts - bonds, loans and other obligations. The very essence of default is that the debtor independently declares its financial insolvency and insolvency.
"Default means the failure of the borrower to fulfill its obligations to service the debt. In particular, default on government or corporate bonds is considered to be the delay by the issuer in paying interest on the bonds for at least one day. Sometimes, if such a delay occurs for only one or several days, mainly for reasons beyond the control of the issuer, this situation is called a "technical default" and does not mean that the issuer is unable to pay interest or fully repay its obligations to creditors. Accordingly, default of the state is the failure of the state to fulfill its obligations on bonds," comments leading analyst of Freedom Finance Global Natalia Milchakova.
Nikolai Vavilov, a specialist in the strategic research chile mobile database department of the TR company, named the main signs of an impending default on a national scale.
1. Failure of the state to fulfill its obligations to creditors.
2. Decrease in government revenues.
3. The strongest exchange rate volatility of the national currency.
4. Global economic recession.
In Russia, two key events associated with default occurred in the 1990s: Pavlov’s monetary reform in 1991 and the default of 1998, recalls economist Anastasia Rurik.
According to her, there was no default in the classic sense in 1991. Instead, there was a reform that meant many people were unable to exchange their notes, causing them to lose their savings. This was a consequence of the economic crises of the late 1980s, including the fall in oil prices.
“The 1998 default, on the contrary, was a direct consequence of the state’s inability to fulfill its obligations under federal loans,” comments Rurik.
"Default means the failure of the borrower to fulfill its obligations to service the debt. In particular, default on government or corporate bonds is considered to be the delay by the issuer in paying interest on the bonds for at least one day. Sometimes, if such a delay occurs for only one or several days, mainly for reasons beyond the control of the issuer, this situation is called a "technical default" and does not mean that the issuer is unable to pay interest or fully repay its obligations to creditors. Accordingly, default of the state is the failure of the state to fulfill its obligations on bonds," comments leading analyst of Freedom Finance Global Natalia Milchakova.
Nikolai Vavilov, a specialist in the strategic research chile mobile database department of the TR company, named the main signs of an impending default on a national scale.
1. Failure of the state to fulfill its obligations to creditors.
2. Decrease in government revenues.
3. The strongest exchange rate volatility of the national currency.
4. Global economic recession.
In Russia, two key events associated with default occurred in the 1990s: Pavlov’s monetary reform in 1991 and the default of 1998, recalls economist Anastasia Rurik.
According to her, there was no default in the classic sense in 1991. Instead, there was a reform that meant many people were unable to exchange their notes, causing them to lose their savings. This was a consequence of the economic crises of the late 1980s, including the fall in oil prices.
“The 1998 default, on the contrary, was a direct consequence of the state’s inability to fulfill its obligations under federal loans,” comments Rurik.