Russia explores financial avenues amid sanctions, considers yuan loans

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Anton Siluanov

26th February 2024 – (Moscow) Russia’s quest for economic stability amidst heavy international sanctions has led the nation to consider novel financial strategies, including borrowing in Chinese yuan, according to statements released by Finance Minister Anton Siluanov on Monday.

The discussions, part of a broader dialogue with China that has been ongoing for an extended period, are yet to yield a definitive outcome. “Negotiations with Chinese partners have been going on for a long time. So far there is no decision,” Siluanov disclosed to RIA news agency.

These talks were part of the end-of-year inter-ministerial conversations, as Russia continues to seek alternatives to Western financial systems that have largely isolated Moscow following its military actions in Ukraine.

In a move that illustrates Russia’s pivot towards new financial technologies, Siluanov mentioned Moscow’s readiness to commence trials with digital currency payments. This initiative could potentially involve China or the Eurasian Economic Union members, signaling a shift towards embracing digital financial solutions in international trade.

The minister emphasised Russia’s stance on reciprocity in financial dealings, particularly in response to Western actions. Following the invasion of Ukraine in 2022, the European Union and the Group of Seven nations froze approximately 300 billion euros of Russian central bank assets. The fate of these funds remains a contentious issue, with discussions among the EU and G7 members on their potential utilisation continuing for over a year.

“We are following the decisions of Western countries: we have frozen no less (than they have),” Siluanov asserted, signaling Moscow’s preparedness to mirror the financial restrictions imposed by Western countries.

Despite the financial constraints imposed by international sanctions, Siluanov conveyed a tone of fiscal prudence and control. He noted that Russia’s budget has been managed effectively, with revenue streams slightly exceeding projections for the current year. Expenditure has also been kept in check, with the finance ministry implementing stringent controls on advance payments and requiring detailed justifications for spending, a departure from the previous year’s spending pace.