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White House expects minimal impact on U.S. and global economy from Russia default

Economy May 26, 2022 05:05PM ET
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© Reuters. FILE PHOTO: A picture illustration shows Russian rouble banknotes of various denominations on a table in Warsaw, Poland, January 22, 2016. REUTERS/Kacper Pempel/File Photo

By Steve Holland and Kanishka Singh

WASHINGTON (Reuters) -The White House said on Thursday it expects minimal impact on the U.S. and global economy from a potential Russia debt default as Washington decided to not extend a waiver that enabled Russia to pay U.S. bondholders.

"We expect the impact on the U.S. and the global economy to be minimal, given Russia has already been isolated financially," White House spokesperson Karine Jean-Pierre said in a press briefing on Thursday.

"That being said, Treasury Department continues to monitor and have conversations with global financial community," she said.

The United States pushed Russia closer to the brink of a historic debt default on Wednesday by not extending its license to pay bondholders, as Washington ramps up pressure following Russia's actions in Ukraine.

The U.S. Treasury Department said on its website late on Tuesday it would let lapse a license which expired at 12:01 a.m. ET (0401 GMT) on Wednesday and allowed Russia to make interest and maturity payments on its sovereign debt to U.S. persons.

That waiver has allowed Russia to keep up government debt payments, but its expiry now appears to make a default inevitable on at least some its $40 billion of international bonds - Russia's first major external one for more than a century.

Western sanctions imposed after the Kremlin's Feb. 24 invasion of Ukraine, and countermeasures from Moscow, have complicated the movement of money across borders, yet Russia has made a conscious effort to keep paying bondholders.

White House expects minimal impact on U.S. and global economy from Russia default
 

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humayoun nabi May 26, 2022 4:46PM ET
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