Is a Repetition of the 1998 Default Possible? Experts Expressed Their Opinion
The Russian financial system in 1998 was not able to pay off domestic and foreign debts due to the pyramid of state short-term obligations. Therefore, on August 17, the Russian government announced the introduction of a set of measures aimed at normalizing financial and budgetary policy, which actually meant default and devaluation of the ruble. The fulfillment of obligations to non-residents on loans, on transactions in the derivatives market and on pledge operations was suspended for 90 days.
Thus, according to the Central Bank of Russia, at the beginning of 1998, the total external debt amounted to $ 182.9 billion, of which $ 147.7 billion fell on the state. As of July 1, 2020, the external national debt was only $ 65.5 billion, with a total debt of $ 477.3 billion. But at the same time, on August 7, 1998, the Central Bank's gold and foreign exchange reserves were only $ 17 billion, and on August 7, 2020 - $ 600.7 billion.
Analysts point out that the mid-term outlook should not be scary either. "The public debt in Russia is lower than in the group of developed countries and a number of developing countries. Nothing indicates a dangerous level of this debt and the declaration of default. If we are talking about public debt, then after what happened in the late 1990s, the Ministry of Finance maintains to maintain a low level of public debt and a safe ratio of it to GDP, "the experts noted.