WASHINGTON: The United States has barred 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 on Tuesday.

The latest move increases the risk the country will not be able to pay creditors.

“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.

The official later clarified that the ban started on Monday when Moscow was due to make a debt payment.

“Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default,” the spokesperson said.

Debt payments previously had been exempt from the near complete lockdown that severed Russia from the global financial system, and the country made several such payments to foreign creditors since sanctions were imposed, but the exemption expires in May.

The country also has been allowed to receive cash for oil and gas sales, a key source of foreign currency, although the US has banned imports from Russia.

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.

Published in Dawn, April 6th, 2022