Russia’s 1998 financial crisis included a default on domestic government debt in August.
On August 17, 1998, the Russian government devalued the ruble, declared a temporary moratorium on some foreign payments, and restructured or defaulted on domestic ruble-denominated debt. The announcement followed years of fiscal pressure, weak tax collection, falling commodity revenues, and heavy reliance on short-term government securities.
The crisis damaged Russian banks and caused the ruble to lose much of its value. International investors also reassessed risks in other emerging markets, and the failure of the U.S. hedge fund Long-Term Capital Management soon created concerns about financial contagion.
Russia’s episode is distinct from the 1997 Asian financial crisis, although the events were connected through investor sentiment and global capital flows. The ruble later stabilized after a sharp depreciation, and Russia’s economy eventually benefited from higher oil prices in the following decade.