Russia's debt

Main article: Russian economy

Non-financial debt

2022: Aggregate non-financial debt

National debt of Russia

Main article: State Debt of Russia

External debt of Russia

2024

Reduction of external debt by 40% in 2.5 years to $293.4 billion

By the end of the third quarter of 2024, the external debt of the Russian Federation was reduced by a record 40% or by $200 billion in 2.5 years

In the modern history of Russia, there was only one comparable period of external debt compression (from 3q14 to 1q16) on the first wave of sanctions after the return of Crimea to the Russian Federation. For the same period of time, then external debt decreased by 210 billion, but only by 29% (now stronger - 40%).

By the beginning of October 2024, external debt amounted to only 293.4 billion and returned to the level of the 2nd half of 2006 (the level of 18 years ago), but relative to the size of the economy - the minimum ratio in the modern history of Russia.

The reduction in debt is primarily due to the inability to refinance debts after the imposition of sanctions, and not only in the jurisdiction of the United States and its allies, but even with China, it was not possible to establish external funding due to the risks of secondary sanctions.

The main negative aspect for business is the need to accumulate currency in external accounts to pay off foreign currency obligations, which diverts resources from development projects.

As a rule, business keeps foreign exchange earnings in the accounts of foreign banks, while the domestic currency circuit in Russia is practically not used, at least in 2024, but was used in 2022-2023 (which put pressure on the ruble through increased demand for foreign currency).

Foreign debt accumulated mainly export-oriented structures; accordingly, there is an ability to generate foreign exchange earnings.

For the ruble exchange rate, the operation is neutral in 2024, especially since the rate of reduction in external debt has decreased (only $24.5 billion for 9m24 versus $61.3 billion for 9m23).

In terms of currency stability, only foreign currency debt matters. According to the latest data, as of mid-2024, about 2/3 of external debt in foreign currency is about 200 billion.

This is a positive signal for the ruble, because the balance of external debt in foreign currency is about three years of potential repayment in accordance with the volume of the current account surplus - this is the best indicator among all countries of the world!

From the positive: reducing financial risks and dependence on external creditors, strengthening the domestic foreign exchange market and ruble funding instruments.

From the negative: an increase in the cost of debt servicing (refinancing comes in rubles at high rates), a decrease in international cooperation, investment in the Russian economy and technological saturation (along with external debt, technologies for direct investment usually come).

Reduction of external debt to $317 billion, of which $208 billion in foreign currency

While all the leading countries of the world accumulate debts, Russia manages to extinguish them without a significant impact on financial stability.

At the beginning of 2022, external debt amounted to 488 billion with the maximum volume for the entire time of 733 billion (2Q14 before the introduction of Crimean sanctions), and at the beginning of 2024 - 317 billion.

However, foreign currency debt matters. And there is significant progress with foreign exchange external debt: at the beginning of 2022 it was 353 billion, and at the beginning of 2024 it became 208 billion, and the maximum for the entire time was 1Q14 at the level of 549 billion, i.e. a decrease of 1.7 times in two years and 2.5 times in 10 years.

In world history, there was no precedent for such a large-scale and rapid reduction in external debt in the context of a stable macroeconomic background (the Russian economy by April 2024 is about 2% higher than December 2021).

Foreign exchange foreign debt of the non-financial private sector is even less - 155 billion against 244 billion at the beginning of 2022.

2023

Decrease in the third quarter to $329.5 billion of which $233.3 billion in foreign currency

Russia's external debt as of October 1, 2023, according to preliminary data from the Central Bank of the Russian Federation, amounted to $329.5 billion, having decreased by $110 billion per year.

In the debt structure

• government bodies account for $32 billion vs $67 billion a year earlier,
• the financial sector (banks and the Central Bank) holds $92 billion vs $102 billion in October 2022, and
• other sectors have external liabilities of $205 billion vs $273 billion last year.

The currency structure has not been published since January 2022, but there is information on the distribution of debt to foreign and national currencies, but only as of July 1.

However, knowing the ruble exchange rate and the approximate ruble debt (about 9.3 trillion rubles), it can be assumed that as of October 1, 2023, the debt in national currency amounted to $96 billion. Over the past year, the ruble external debt practically did not change, but decreased in foreign currency by 1.7 times (the exchange rate cut-off on October 1, 2022 was 55.3 rubles per dollar).

In the structure of external debt reduction, exchange rate revaluation accounts for almost 60%, and debt in foreign currency changed as follows: 4q21 - $350 billion, 1q22 - $340.3 billion, 2q22 - $303.2 billion, 3q22 - $278.5 billion, 4q22 - $261.5 billion, 1q23 - $251.1 billion, 2q23 - $237.8 billion, 3q23 - $233.3 billion (minimum level from Q4 2006!).

In terms of the impact on the exchange rate ruble , foreign currency debt matters. Since the beginning of SVO, foreign To Ukraine currency foreign debt has decreased by $117 billion, over the year a reduction of $45 billion, since the beginning of the year - a decrease of $28.2 billion, but a slowdown of 3q23.

The record rate of debt reduction in the history of Russia is a third of obligations for 7 quarters, compared with 20% in 2015-2016. After the events in 2014, Russia was largely cut off from the international financial market, but the possibility of refinancing debts was partially preserved, but with restrictions.

After 2022, the fundamental process of debt refinancing was disrupted, which forced Russia to divert hundreds of billions of dollars to service external obligations, withdrawing capital from development.

Q2 decline to $347 bn - at least Q1 2007

Russia's external debt as of July 1, 2023 amounted to 347.6 billion - at least from Q1 2007. For 1.5 years, external debt decreased by 134.7 billion, of which the state accounted for 26.4 billion reductions in obligations or 40% of all debts that were before the outbreak of the conflict in Ukraine. The Central Bank and banks reduced external debts by 20.7 billion, and other sectors (mainly non-financial organizations) reduced liabilities by 87.7 billion over 1.5 years.

In the entire modern history of Russia, there have been only three phases of active debt compression over 50 billion in a short period, in addition to the current episode.

The current reduction in external debts is the second in scale and intensity in history, and excluding the Central Bank and banks is almost comparable to 2014-2015.

The separation of Russia from foreign capital markets, the almost complete dominance of the currencies of unfriendly countries and the underdevelopment of the funding infrastructure in the currencies of neutral countries has a destabilizing effect on the balance of payments and exchange rates. ruble

The reduction in foreign currency external debt in Russia amounted to $112 billion since the beginning of the SVO in Ukraine (the fastest reduction in debts in history), and the total debt as of July 1, 2023 is about $238 billion in foreign currency.

Russia's maximum debt on external debt in foreign currency was on April 1, 2014, and immediately after the Crimean events, the debt compression process began - the first sanction blow.

The active phase of compression ($105 billion) lasted 5 quarters until July 2015, and by the beginning of the SVO (over 8 years), external obligations decreased by $200 billion. In just 1.5 years after the start of the SVO, almost 60% of the debt compression 2014-2021 was reduced.

Debt structure:

• State - $17.4 billion without short-term debt
• Central Bank plus finsector - $56.5 billion, of which $13.7 billion is short-term debt
• Non-financial sector without obligations to direct investors - $104.6 billion ($16.4 billion before the year)
• Liabilities to direct investors - $59.3 billion.

Since the beginning of 2023, almost $24 billion has been repaid in six months, and this is a lot, given the near-zero surplus in the current account.

As of July 1, 2023, short-term foreign currency debt is almost $47 billion.

Russia will have to repay another 35-40 billion external debts in 2P 2023, which, with a near-zero account of current operations, puts the main pressure on the ruble.

Q1 decline to $358 billion (15% of GDP) - at least Q2 2007

Russia's external debt fell to $358 billion on April 1, 2023 - this is the lowest level in 16 years (the last time comparable values ​ ​ were in April 2007)!

From the beginning of the conflict in Ukraine, external debt decreased by $125 billion, and a more intensive reduction for a comparable period was only in 2005 (200 billion in 5 quarters).

The level of external debt of the Russian Federation in relation to GDP in the first quarter of 2023 dropped to a historic minimum of 15.45% - data from the Central Bank.

At the end of 2022, the volume of debt to non-residents to GDP was 16.6% (the smallest result since 1993), and then fell even more. So, in the last days of March, according to the Central Bank, state and corporate debt reached a level of $354.8 billion.

The maximum level of external debt to GDP (91%) was observed in Russia in 1999.

Since the beginning of the geopolitical confrontation with the collective West in 2014, external debt has more than halved (from 733 to 358 billion), which has become the longest and largest decrease in external obligations among all major countries of the world.

The decline in external debt at the beginning of the 2023 is partially due to the weakening of the ruble, however, foreign currency debt has decreased by more than 100 billion since the beginning of the 2022.

In principle, Russia is actively closing its external obligations and reducing dependence on the global financial system. It's both good and bad.

The plus is that instability in the global market will have a minimal impact on Russia, and the minus is that one of the main funding resources and the quality of resources/technologies are lost.

External debt is not just borrowing, but also investing in business, i.e. improving the quality of capital and access to foreign technologies. Now that's not there. World experience shows that there are no success stories when cutting off from global capital (DPRK, Cuba, Venezuela, Iran, Syria, etc.), Spydell Finance wrote.

But the plus is that finally it will be necessary to develop domestic channels and sources of financing, which will strengthen the national financial system, both qualitatively through the development and diversification of financial instruments and regulatory norms, and quantitatively through an increase in the volume of lending and funding on the open market.

2022

Russia has increased external debt only to India

At the end of 2022, Russia increased its external debt to only one creditor - India. Its value reached $777.4 million against $610.1 million in 2021. Thus, the annual growth was approximately 27.4%. This is stated in a World Bank report published on December 13, 2023.

The report notes that in 2022, Russia reduced its debt to two other creditors - France and South Korea. Debt was recorded at $177.8 million and $209.8 million, respectively, while in 2021 these values ​ ​ were $314.6 million and $279.7 million.

According to RBC, as of the end of 2022, the total debt of Russian residents to residents of other countries and international financial organizations was $376.1 billion. This is 20%, or about $96 billion, less than at the end of 2021. About $136.1 billion of the total amount was state or state-guaranteed debt: in this segment, the year-on-year reduction was at around 23%.

Owners of Russian bonds (private and state) by the end of 2022 account for $67.9 billion of total debt, including $44.4 billion of public sector debt or under state guarantees. According to the results of 2022, Russian private borrowers owe the European Investment Bank $8.3 million, the Northern Investment Bank - $1.2 million. At the same time, sovereign or quasi-sovereign borrowers owe French commercial banks $177.8 million. About $24 billion of Russian debt in the World Bank database is special borrowing rights of the International Monetary Fund (IMF).

According to the Bank of Russia, the external debt of the Russian Federation as of October 1, 2023 amounted to $329.5 billion, having decreased from the beginning of 2023 by $54.1 billion, or 14.1%. A significant decrease in government debt is due to a decrease in the dollar equivalent of obligations due to a weakening of the national currency against the US dollar, as well as a decrease in the volume of Russian sovereign securities at the disposal of non-residents, including as a result of their planned repayment.^[1]

Reduction of external debt by $100 billion to $380 billion or 17% of GDP

In 2022, Russia's external debt decreased by more than $100 billion (minus 21% YoY from 482 to 380 billion). A more intensive reduction was only in 2015 in the wake of the first post-Crimea sanctions strike (minus 24% YoY).

From the maximum in 2014 (733 billion), external debt almost halved. The current level of external debt decreased to mid-2007.

This is the longest and strongest reduction in external obligations of any major country in the world in modern history. Foreign debt to GDP fell to 17%, in 2014 this figure reached 34%, grew to 40-42% by 2016 due to the devaluation of the ruble. The ratio of external debt to GDP has reached its lowest level since at least 2000.

There are still positive trends. At the beginning of 2000, almost 100% of external debt was in foreign currency, in 2005 the debt in foreign currency decreased to 90%, in 2008 - 77%, in 2014 - 75%, in 2021 - 72%, and as of January 1, 2023 - 65-67%.

At the beginning of 2022, foreign currency debt was almost completely distributed in dollars (59%) and euros (28%) and about 13% in other currencies, and unfriendly currencies accounted for almost 95%.

The currency structure of debt is now unknown, but there is no doubt that the share of unfriendly currencies will decline for technical reasons - completely blocked channels of external funding in the currencies of unfriendly countries.

The decrease in external obligations will go on the trajectory of debt repayment as the maturity expires, but early repayment is also permissible (in 2022, with a debt of up to 86 billion, they repaid 102 billion).

The detachment from the financial system of the West is happening very rapidly and there are two positive points here, Spydell Finance noted:

• During the financial crisis in the United States and Europe, negative events will practically not affect Russia, while the degree of integration in 2008-2009 was very high, which led to painful consequences for Russia.

• We will have to learn how to develop and use internal (ruble) funding channels.

Record reduction in external public debt in foreign currency to $275 billion

After the outbreak of the conflict in Ukraine, Russia's foreign debt in foreign currency decreased by 75 billion or 21.5% (from 350 billion to 275 billion), which was the most intensive reduction in foreign debt position in the entire modern history of Russia.

The state has debts in foreign currency for 19 billion, banks - 65 billion, other sectors - 106 billion, and obligations to direct investors - 83 billion.

After the first wave of sanctions in 2015, external debt decreased at a rate of 15-16% in three quarters, and in the financial and economic crisis of 2009, the reduction was no more than 8%.

In 2022, the most aggressive "dumping" of debts occurred from April to September, when $65 billion was repaid (in percentage terms - a record, and in absolute comparison the last time this was from Q4 2014 to Q1 2015).

275 billion of foreign foreign currency debt is a very low load, at par it is the levels of Q1 2007, and taking into account the GDP and income of economic agents in dollar terms, it is more than twice as low as in 2007.

The debt burden on Russia's external debt relative to the income of economic agents is comparable to the beginning of the 2000s (approximately 13% of GDP) and is several times less than that of developing countries.

In 2022, the foreign trade surplus was almost comparable to all external debt accumulated over 30 years!

The total external debt is 434 billion, but 159-160 billion is ruble external debt. Why did I emphasize foreign currency external debt? This is the part of the debt that is not directly controlled by Russian issuers and, as a rule, issued in foreign jurisdiction.

Accordingly, default on foreign currency external debt has a high risk of blocking collateral assets. Of course, there may be symmetrical Russian retaliatory measures and blocking foreign property, but this is what should be taken into account when analyzing debt in Russian realities.

So far, it is clear that the business is actively reducing external obligations, and the compression rate plus or minus is comparable to the volume of repayments, that is, the ability to refinance is zero.

Foreign debt falls to 15-year low

By December 2022, Russia's external debt remains at its lowest levels over the past 15 years. As of October 1, 2022, its value is $436.8 billion. Since the beginning of 2022, it has decreased by $45.4 billion, that is, by 9.4% (data from the Central Bank of the Russian Federation).

At the same time, Russia remains one of the largest creditors of third world countries, second only to China, Japan, Germany and France. According to the World Bank, the total debt of other states to the Russian Federation is $26.54 billion. And in two years this amount has grown by 16%. In 2021, 38 countries remained debtors to Russia.

Most of all Russia owes Belarus - $8.4 billion. And the total debt of the countries of Asia and Africa is 13.4 billion. According to experts, Russia will never return most of these debts, but considers these loans as investments in its security (especially in the case of Belarus) and as an entrance ticket to work on promising markets in Asia and Africa, Komsomolskaya Pravda notes. ^[2]

Decrease in external debt by 5.5% to $453.5 billion - at least 13 years

The external debt of the Russian Federation in the first quarter of 2022 decreased by $26.5 billion, or 5.5%, to $453.5 billion, according to information posted on the website of the Central Bank of the Russian Federation. As a result, the volume of external debt became the minimum in 13 years, from April 1, 2009 it amounted to $445.5 billion.

The Central Bank said in a commentary that the dynamics of the indicator was mainly influenced by a reduction in foreign debt of other sectors.

2021

India is the only country from which the Russian Federation took a loan

India ― the only country from which Russia took out a loan in 2021. This is evidenced by the data of the World Bank, released in December 2022.

In 2021, Russia's debt to India more than tripled to $610 million. Meanwhile, the Russian Federation managed to reduce its debt to France and South Korea by ― 20% (to $279.7 million, the minimum level since 1992) and 34%, to ($315.6 million), respectively.

Russia's external debt, according to the World Bank, in 2021 amounted to $481.4 billion, which is 4.4% more than a year ago.

About 21% of Russian external debt belongs to bondholders, while at the end of 2021 it decreased by 8.3% - to $99.4 billion. The main share of Russian external debt fell on large institutional creditors who are not related to states - they account for 73.8% of all debt obligations. This debt in 2021 increased by 3.6% - to $355.4 billion.^[3]

Debt reduction by $11 billion

By January 1, 2022, Russia's external debt amounted to $478.2 billion, which is $11 billion more than the same period in 2021. Such data in January 2022 was published by the Central Bank of the Russian Federation.

The growth was mainly due to an increase in the debt of the Central Bank of the Russian Federation by $21.2 billion, mainly due to the distribution of SDR holdings in favor of the Russian Federation IMF and an increase in external debt of banks by $7.7 billion due to the attraction of funds from non-residents within the framework of interbank operations, the regulator said in a statement.

According to statistics from the Central Bank, foreign debt of government bodies in 2021 decreased by $2.5 billion as a result of a reduction in non-residents' investments in sovereign securities. Debts of other sectors decreased by $15.3 billion due to the payment of external loans attracted, including within the framework of direct investment relations.

According to the Central Bank, Russia's external debt in the first quarter of 2021 decreased by $5.4 billion, in the second - increased by $11.7 billion, in the third - increased by another $17.2 billion, in the fourth - decreased by $12.5 billion.

At the end of September 2021, it was reported that the expenses of the Russian government on servicing public domestic debt will grow by 300 billion rubles in 2022-2024. relative to the indicators planned in the previous budget. In just three years, the Ministry of Finance will allocate about 5 trillion rubles to service the public debt (domestic and external debt), of which 1.4 trillion rubles will be spent in 2022.

Over the past years, Russian debt policy has remained quite conservative, despite the gradual (until 2020) expansion of both domestic and external debt. For several years (2017-2021), the share of external public debt was maintained at the level of 20-25%.^[4]

Reduction of external debt to $459 billion

According to the Bank of Russia, the external debt of the Russian Federation as of April 1, 2021 amounted to $459.3 billion, having decreased by $8.6 billion since the beginning of the year. Reduction of debt obligations to non-residents were observed in all sectors of the economy, except the banking sector, while the most noticeable was a decrease in foreign debt on the obligations of other sectors on external loans, as well as a decrease in the portfolios of non-residents in sovereign securities.

2020: Central Bank: Russia's external debt decreased by 4.3% to $470.1 billion

Russia's external debt in 2020 decreased by 4.3% (or $21.3 billion), amounting to $470.1 billion. This is evidenced by the data of the Central Bank of the Russian Federation.

The regulator noted that a decrease in debt obligations to non-residents was recorded in all sectors of the economy. The most noticeable was the decrease in foreign debt of other sectors on attracted loans.

External obligations of government bodies decreased in 2020 by $3.9 billion, or 5.5%, to $66.1 billion.

Debt to non-residents on federal ruble government securities decreased over the year in dollar terms by $2.5 billion, or 5.5%, to $43.8 billion.

Debt on sovereign foreign currency Eurobonds for the year decreased by $1.1 billion, or 4.9%, to $21.2 billion.

Banks in 2020 reduced external debt by $4.5 billion, or 5.8% - to $72.5 billion. The debt of other sectors of the economy decreased by $12.2 billion, or 3.7%, to $318.5 billion.

Including over the year, the debt obligations of companies to direct investors and direct investment enterprises decreased by $7.8 billion, or 5.4%, to $137.5 billion, loan debt decreased by $9.8 billion, or 6.5%, to $141.3 billion, trade loans increased by $2.9 billion, or by 30%, to $12.6 billion, debt on financial leasing - by $4 billion, or 40.5%, to $14.0 billion.

The external debt of the Bank of Russia for the year decreased by $0.8 billion - to $13.1 billion, in the fourth quarter - by $0.3 billion. ^[5] of the ^[6]].

2019: External debt about $850 billion

As of April 2019, almost all of Russia's external debt is corporate debt. And the state prefers to borrow money within the country. The internal debt under OFZ is about 200 billion dollars, 4 times more than the external one. But by adding up all the debts of the state, we will get a modest 10-15% of GDP.

The total debt of the corporate sector is more - about 600 billion dollars, 30-40% of GDP. In total, we will count all debts about $850 billion, or about 50% of GDP. The bulk of the debt is covered by savings, in particular, by international reserves, the size of which reached $491 billion. Thus, Russia remains an uncredited and financially stable economy.

2018: $65 billion foreign debt cut in three quarters after new wave of sanctions against Russia

The second wave of sanctions against Russia in April 2018 led to a reduction in external obligations by 65.5 billion in three quarters, of which the state - minus 15.8 billion of external debts, banks and the Central Bank - minus 25.4 billion, other sectors - minus 24.4 billion.

2017

Russia repaid the last external debt of the USSR

The Russian Federation on August 8, 2017 repaid an external debt to Bosnia and Herzegovina, which became the last settled obligation of the USSR to a foreign creditor state, according to the Ministry of Finance of the Russian Federation.

The report notes that the debt to Bosnia and Herzegovina in the amount of 125.2 million dollars USA is settled by an agreement between the Government of the Russian Federation and the Council of Ministers of Bosnia and Herzegovina on the settlement of the obligations of the former USSR on settlements related to trade between the former USSR and the former SFRY, signed To Moscow on March 21, 2017 and entered into force on July 20, 2017.

The report notes that in terms of the state external debt of the Russian Federation to official bilateral creditors, only debt to the Republic of Korea in the amount of $594.3 million remains outstanding.

"In accordance with the current bilateral intergovernmental agreement, the specified balance of obligations is subject to repayment until the end of 2025," the ministry said.

$513.478 billion

According to the Central Bank of the Russian Federation, Russia's external debt amounted to $513.478 billion by January 1, 2017 against $519.101 billion by January 1, 2016. Thus, the debt decreased in 2016 by $5.623 billion (-1.1%).

"Since the second half of 2014, Russia's external debt has been repaying rapidly. Until recently, external debt, according to the Central Bank, amounted to $720 billion, as of July 1, 2015 - $550 billion, as of October 1, 2015 will see a figure close to $500 billion, "said Deputy Finance Minister Maxim^[7] in September 2015^[7]

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Russia's direct public debt is lower than other large economies - both in absolute terms and in relation to GDP. However, the peculiarity of Russia is that it has a large number of state-owned companies, whose debts are very large not only in comparison with their revenue, but also in relation to the entire GDP.

At the beginning of 2015, according to the Central Bank, the external public debt of Russia in the expanded definition (the so-called debt states together with the debt of state-owned companies) is more than $377 billion^[8]It became more difficult to give this money to the state and state-owned companies in 2014 due to devaluation, and ruble to re-lend due to sanctions from USA the EU. Thus, the risks of default of the state or state-owned companies at this time increased. An additional threat was the decline in GDP in dollar terms, which is why the level of public debt in relation to the size of the economy is increasing.

Nevertheless, this threat should not be exaggerated - the largest state-owned companies, Gazprom and Rosneft, even in the face of falling oil prices, have constant foreign exchange earnings, and Russia has a positive trade balance and significant reserves.

2016: Reduction of external debt by $214 billion in 6 quarters after the return of Crimea to Russia

The first wave of post-Crimea sanctions from July 2014 to January 2016 (6 quarters) led to a reduction in external debts by 214.3 billion, of which the state - minus 26.6 billion, the Central Bank and banks - minus 81.6 billion, and other sectors - minus 106 billion.

2009: $94 billion foreign debt cut in 3 quarters due to global economic crisis

From Q4 2008 to Q3 2009 (Q3), external liabilities decreased by 94.7 billion, where the state - minus 5.2 billion, the Central Bank and banks - minus 52.4 billion, other sectors - minus 37.1 billion.

Debts of the subjects of Russia

Main article: Debts of the constituent entities of Russia

The consolidated budget of the constituent entities of the federation is the combined budget of all regions and municipalities included in these regions, excluding interbudgetary transfers. The deficit of the consolidated budget of the regions is covered mainly by the federal budget.

Countries' debts to Russia

Main article: Debts of countries to Russia

Notes