Current state and prospects of resolution of public external debt problem in Russia

Abstract

The article provides a comprehensive analysis of public external debt problem in Russia in period of 1991–2021. The author highlights and characterizes five stages of the debt problem development. A distinctive feature of the current stage (2014 — present) is the presence of sanctions risk, which remains one of the most important factor of the Russian loan portfolio. The narrowing of opportunities for Russian public debt is likely to increase Russia’s dependence on domestic financing which is already high. It is established that external corporate debt has been determining the dynamics and volume of Russian external debt since the mid-2000s. It is revealed that from the point of view of debt sustainability of country, Russian economy is in more favourable position than many developed countries in the grip of debt crisis. However, there are risks to the country’s external debt sustainability, and they lie in the corporate sector. Special attention is paid to the fact that a significant part of corporate debt is formed by the debt of quasi-sovereign organizations. At the end of the article, a plan on replacement of external sources of loans with domestic ones is proposed. During implementation of this plan, it is necessary to take into account that the loans from companies and banks from classic offshores and from countries involved in offshore financial schemes form a significant part of corporate debt. Consequently, these may be ordinary intra-corporate financial transactions, and the real corporate external debt is much lower and requires less financial resources to settle it.