Russia offers foreign debt payment system similar to gas one

MOSCOW (AP) — Russia said Monday it may use an arrangement similar to that used for payments for its gas supplies to pay its dollar-denominated foreign debts.

The Vedomosti business daily quoted Finance Minister Anton Siluanov as saying that Russia will offer the holders of its Eurobond obligations to accept a payment system bypassing Western financial infrastructure.

Russia previously has offered the customers receiving its natural gas to establish an account in dollars or euros at Russia's third-largest bank, Gazprombank, then a second account in rubles.

The importer would pay the gas bill in euros or dollars and direct the bank to exchange the money for rubles.

The system was established on Russian President Vladimir Putin's order and aims to avoid a risk of payments for gas being frozen as part of Western sanctions against Russia for its action in Ukraine.

Siluanov told Vedomosti that a mechanism similar to that will be set for Eurobond holders, who will be offered to open foreign currency and ruble accounts at a Russian bank.

“In payments for gas, we are credited with foreign currency and it's converted into rubles,” Siluanov was quoted by Vedomosti as saying.

“The Eurobond settlement mechanism will work in the same way, just in the other direction.”

He said payments will be made through Russia's National Settlement Depository.