US blocks Russia from paying debt with dollars held in US banks: Treasury

AFP , Tuesday 5 Apr 2022

The United States starting Tuesday will bar Russia from making debt payments using funds held at American banks, ramping up the economic pain on Moscow over its invasion of Ukraine, the US Treasury said.

rouble
FILE PHOTO: A view shows a Russian rouble coin and a U.S. dollar banknote in this picture illustration taken October 26, 2018. REUTERS

"Today is the deadline for Russia to make another debt payment. Beginning today, the US Treasury will not permit any dollar debt payments to be made from Russian government accounts at US financial institutions," a Treasury spokesperson told AFP.

"Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default."

Debt payments previously had been exempt from the near complete lockdown that severed Russia from the global financial system, and the country had made several payments to foreign creditors through major US banks.

The country also has been allowed to receive payments for oil and gas sales, although the US has banned imports from Russia.

But the White House on Monday warned more sanctions were coming on Russian leader Vladimir Putin following the emergence of alleged atrocities in formerly Russian-occupied areas of Ukraine.

The latest US move "will further deplete the resources Putin is using to continue his war against Ukraine and will cause more uncertainty and challenges for their financial system," the Treasury official said in a statement, noting the country "is facing a recession, skyrocketing inflation, (and) shortages in essential goods."

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