28 Jun 2022 16:58

Russian Duma passes bill allowing Eurobond payments in rubles in 2022 at first reading

MOSCOW. June 28 (Interfax) - Russia's State Duma has passed at first reading a bill that allows the country to make payments on sovereign Eurobonds in rubles this year.

The government introduced the bill, No. 149578-8, to the lower house of parliament last week.

It suspends for the period of January 1, 2022 to January 1, 2023 the Tax Code norm according to which settlements on international bonds must be carried out in foreign currency.

The regulation that the obligations of the Russian Federation arising from the issuance of the relevant government securities, constituting external debt and proving entitlement to receive income or redemption in monetary form are payable in foreign currency is suspended for 2022.

The bill was drafted "in connection with the decision by the United States to refuse to extend the license for investors to receive payments in dollars on Russian government debt obligations, as well as the Russian central depository's inability to make further payments in euros due to its inclusion by the European Union in the 'sanctions' list," according to an explanatory note to the bill.

"That we're suspending the relevant Tax Code norm only until the end of the year simply provides the ability to look forward to how the situation will develop and correspondingly make the necessary decisions. This bill lends our budget framework greater flexibility," Andrei Makarov, head of the Budget and Taxes Committee, said when presenting the bill.

It was earlier expected that the bill would be considered by the State Duma in three readings at once, but it is obvious now that the bill will need amending in connection with the creation of next year's budget, Makarov said. "Amendments to the bill will be considered this evening, and therefore if the house agrees, there is a proposal to submit it for a second reading on Thursday [June 30]," he said.