In its latest intelligence update, the British Ministry of Defense says Russia’s plan to issue sovereign debt in foreign currencies suggests a potential reliance on external financial support from friendly foreign states to finance its ongoing war in Ukraine.
The ministry tweeted:
- “On the 28th March 2023, Russian Prime Minister Mikhail Mishustin said that a move to issuing some of Russia’s sovereign debt in foreign currencies was ‘under development’.”
- “The move is almost certainly an indication that Russia anticipates external financial support from foreign states it deems ‘friendly’.”
- “Once the development is completed, investors from other countries will be able to purchase Russia’s sovereign debt and therefore finance some of Russia’s future budget shortfalls. Such investors would be indirectly financing Russia’s invasion of Ukraine.”
- “In recent months, Russia’s own banks have been the main entities purchasing Russian state debt. However, they are unlikely to have the capacity to fully fund anticipated future budget deficits. Russian officials likely see external debt issuance as one way to plug gaps in Russia’s finances as they plan for a long war in Ukraine. However, it remains unclear whether Russia will succeed in implementing the measures.”
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