Australia to keep paying interest on bonds held by Russia

By Jackson Graham

March 3, 2022

Josh Frydenberg
Treasurer Josh Frydenberg. (AAP Image/Mick Tsikas)

Russia holds about $8 billion in Australian bonds, on which Australia will continue to pay interest, federal treasurer Josh Frydenberg says. 

The treasurer said he had found out this week the Russian Central Bank held the federal bonds, but played down the amount as “not as big as an exposure as they would have to other countries”. 

Frydenberg said Australia would continue to pay interest on the bonds, with the Australian Office of Financial Management making it clear it would continue to do so. 

“We won’t be defaulting on bonds,” he said. 

He added that Russia was attempting to sell its foreign reserves to transfer into domestic currency to strengthen its domestic economy. 

“What the Russians have done, for example, is they have said to all the Russian companies for them to sell their foreign reserves, their foreign currencies and transfer that into roubles,” Frydenberg said. 

Australia’s biggest government fund, the commonwealth Future Fund, indicated it had plans to sell down its $200 million in Russian assets this week. 

The NSW government also announced it will sell its $75 million worth of shares in Russian companies.

Frydenberg said Australia had limited exposure in trade and in financial systems to the Russia-Ukraine conflict, but warned there would be some costs that would impact economic growth this quarter. 

“Where we are going to see an impact here at home is the inflationary impacts of higher petrol prices,” he said. 

The past two weeks have seen oil prices increase above $100 a barrel for the first time since 2014-15, while wheat prices are more than 15% higher. 

“To Australia, higher petrol prices does flow through to inflation and obviously affects many Australian families and businesses,” Frydenberg said. 

“So, the expectation will be that this will impact the price of petrol. Other commodities, like wheat — we are a big exporter of wheat — it may have some impacts on supply chains more broadly. But our exposure economically is significantly less than of course any major European country like Germany and others who rely so heavily on Russian energy exports.”


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