In the 1998 Russian financial crisis, what did Russia default on in August?

Russia defaulted on domestic government debt in August 1998 during its financial crisis. The government also widened the ruble’s trading band and later allowed the currency to devalue.

Russia had financed large budget deficits with short-term government securities, commonly known as GKOs. As confidence weakened, investors demanded higher returns or refused to roll over the debt. Falling commodity prices and the aftereffects of the Asian financial crisis added pressure.

The government announced a 90-day moratorium on some foreign debt payments by Russian banks and restructured domestic ruble debt. The ruble lost much of its value, and the crisis damaged banks and businesses.

This event is often described simply as a Russian debt default, but the most precise answer to the question is domestic government debt. The International Monetary Fund and World Bank had provided assistance before the default, but the support did not restore confidence.