Russia's technical bankruptcy to have consequences
16:15
The Polish Economic Institute (PIE) commented Monday on Russia's technical bankruptcy. The country defaulted on a $100 million interest payment; the deadline expired on Sunday.
"Technical bankruptcy is defined as a situation in which an economy fails to make interest payments on a debt despite having the means to service the debt," PIE reminded.
"In the short run, it will have a moderate impact on the Russian economy – developed countries already stopped all investments in Russia several months ago. However, in the long term, it means a prolonged period of lack of confidence in the Russian economy, including after the end of the war in Ukraine," Jakub Rybacki, head of PIE's macroeconomics team, assessed.
"Russia's other creditors are also likely to start demanding repayment of principal and proceedings in arbitration courts. The lawsuits may lead to the seizure of Russia's frozen foreign assets. As a result, the European Union will hold back economic relations with Russia for many more years," Rybacki added.
