US closes loophole for Russian debt payments

The US is cutting off another financial route for Russia to pay its international debts, a move that could push the country closer to default.

The US Treasury Department said it would end a waiver that had allowed US bondholders to accept payments, tightening sanctions imposed over the war in Ukraine.

Russia, which is rich from its oil and gas supplies, has the funds to pay.

It has already signalled plans to contest any declaration of default.

The country has almost $2 billion worth of payments that will be due up to the end of the year on its international bonds.

While the new rules only apply to people in the US, they will make it difficult for Russia to make payments elsewhere given the role of US banks in the global financial system.

The US had already barred Russia from using US banks to transfer payments.