Analysis - Foreign debt burden at heart of Russian economic worries

Looming debt repayments by Russian companies are now central to discussions of Russia's ability to weather the financial shocks caused by low oil prices and Western sanctions, but the picture is more complex than commonly believed.

MOSCOW: Looming debt repayments by Russian companies are now central to discussions of Russia's ability to weather the financial shocks caused by low oil prices and Western sanctions, but the picture is more complex than commonly believed.
Despite last week's agreement aimed at ending the war in Ukraine, the sanctions are expected to remain for the foreseeable future, perhaps for years if the Ukraine deal fails to lead to a durable peace, leaving Russian companies largely cut off from Western financing.
As long as Western banks refuse to lend, many analysts assume the state will need to help companies repay their US$550 billion in foreign debts. The whole debt burden "has to all intents and purposes been transferred to the national balance sheet", analysts at London consultancy Trusted Sources said in a recent report.
Pessimists therefore worry that even Russia's US$375 billion in central bank foreign exchange reserves will eventually run out. At the very least, sizeable foreign debt repayments add to the strain on the balance of payments, weighing on the rouble.

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