Russia defaulted on its domestic debt during the 1998 Russian financial crisis.
On August 17, 1998, the Russian government devalued the ruble, declared a moratorium on some foreign debt payments by private borrowers, and restructured or defaulted on parts of its domestic debt. The announcement caused severe losses in Russian financial markets.
The crisis followed years of fiscal pressure, weak tax collection, falling oil prices, and the aftershocks of the 1997 Asian financial crisis. Russia had relied heavily on short-term government securities, making its finances vulnerable when investors lost confidence and stopped rolling over that debt.
The ruble later lost much of its value, and the Russian government eventually stabilized the economy with policy changes and improved commodity conditions. The crisis also contributed to the collapse of the hedge fund Long-Term Capital Management, which required a private-sector-organized rescue in the United States.