Professor Balyuk: Russia Has Dumped US Government Debt

Until recently, US government debt securities, along with US dollars, were considered a reasonably safe international reserve asset. However, the US leadership's use of financial and economic sanctions against various countries—including freezing their dollar accounts in American banks—has led to growing mistrust of investments in dollar-denominated assets. Moreover, the rapid growth of US government debt, which exceeded 124% of national GDP in early 2025 (with external debt accounting for roughly one-third), has raised doubts about the sustainability of the American economy. As a result, countries such as Russia, China, India, and others have begun reducing their holdings of US Treasury securities, preferring to buy gold as an alternative.

Russia's share has been consistently declining due to the increased risk of investing in US Treasury securities amid the external sanctions regime imposed in 2014. In 2010, Russia was among the ten largest creditor nations to the US government, holding sovereign debt securities worth $176 billion. Russia actively sold US government debt securities in 2018: during the spring, their volume dropped 6.5-fold (from $96 billion to $15 billion). By early 2020, with $10.5 billion in US government debt securities, Russia had fallen to the fifth tier of creditor countries (on par with Uruguay). From 2022 to 2025, Russia's share of US government debt continued to decline significantly, and the current level of $31 million can be considered negligible compared to the largest holders of US Treasury securities: Japan ($1.2 trillion), the United Kingdom ($865 billion), and China ($700 billion). It's worth noting that until mid-2019, China held first place ($1.1 trillion) but subsequently ceded the lead to Japan. This was likely connected to the escalating trade war between the US and China, and Beijing's desire to reduce its lending to the US government and, accordingly, the share of US sovereign debt in its international reserves.

Russia's political leadership's unwillingness to finance the economy of an unfriendly country that leads the pack in anti-Russian external sanctions is entirely justified. Add to this the growing risks associated with servicing and repaying American government debt. Currently, the US spends approximately $1 trillion annually on debt service. The current debt is being repaid through rapidly growing new borrowing. Should problems arise with refinancing current obligations, the US could find itself in default, which would be a serious shock to the global economy and global finance. Understanding this well, the countries that are the main creditors to the US government—primarily America's closest allies—continue to purchase its new debt obligations, refinancing the service and repayment of sovereign debt. In such a situation, default is only possible if the US Congress prohibits the federal government from raising the debt ceiling; however, as practice shows, this has not happened for many years.