Russia defaulted on domestic debt during the 1998 financial crisis that shook global markets.
On August 17, 1998, the Russian government devalued the ruble, declared a moratorium on some foreign debt payments by private borrowers, and announced a restructuring of domestic ruble-denominated debt. The measures followed falling oil prices, weak tax collection, political instability, and pressure on Russia’s currency and government finances.
The crisis caused a sharp decline in the ruble and severe losses for Russian banks and investors. It also contributed to the collapse of Long-Term Capital Management, a highly leveraged U.S. hedge fund whose positions were disrupted by the sudden market turmoil. The Federal Reserve helped coordinate a private-sector rescue of the fund.
Russia’s 1998 crisis is sometimes loosely described as a sovereign default. More precisely, the government defaulted or restructured parts of its domestic debt while also imposing a moratorium connected to private foreign debt. Those distinctions explain why accounts may describe the event differently.