The Russian government is potentially on the verge of defaulting on its foreign debt for the first time since 1918.

The Epoch Times reports that the payment in question is a $117 million interest payment due on March 16. The debt was on two U.S. dollar-denominated bonds issued several years ago. 

According to Russian Finance Minister Anton Siluanov, payments in U.S. dollars might not reach foreign bondholders because U.S. sanctions had suspended the Russian government’s foreign currency accounts.

Siluanov told Tass, a state-owned Russian news agency, that the Russian government would try to pay in rubles rather than dollars, as required by the terms of the two government bonds. According to Fitch, the credit-rating agency, if President Vladimir Putin’s government fails to deliver the required amounts within a one-month grace period, the country will be declared in default.

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According to the IMF’s chief, a Russian government default on its commitments because of western sanctions over its invasion of Ukraine is no longer “impossible.” Even so, it would not result in a global financial disaster.

Kristalina Georgieva, managing director of the Washington-based fund, said the sanctions imposed by the U.S. and other countries were already having a “serious” impact on the Russian government economy and will cause a significant recession this year. She warned that the conflict in Ukraine would raise food and energy prices.

Due to Russia closing trading links with both nations, the IMF chief expressed concern about the war’s spillover effects on Russia and Ukraine’s neighbors and the massive number of Ukrainians fleeing the conflict. Russian government public debt was lowered to a “C” rating by Fitch’s credit rating last week, signaling that “a sovereign default is inevitable,” CBS reports.

S&P Global Ratings also lowered the Russian government’s foreign and local currency sovereign credit ratings to “CCC-,” citing Moscow’s efforts to alleviate the unprecedented bombardment of sanctions imposed by the U.S. and as “certainly greatly increasing the probability of default,” according to its allies.

According to S&P, Russia’s military conflict with Ukraine has prompted new G7 government sanctions targeting The Central Bank of Russia’s (CBR) foreign exchange reserves. The sanctions have rendered a sizable portion of these reserves inaccessible, undermining the CBR’s ability to act as a lender of last resort and impairing Russia’s standout credit strength — its net external liquidity position. 

The Russian government also stated on Sunday that it expects China to assist it in surviving the economic harm posed by sanctions, although the U.S. has warned Beijing not to do so. Siluanov claimed Moscow could not access $300 billion of its $640 billion in gold and foreign exchange reserves, but a portion of its resources is still held in the Chinese currency.

The Washington Post reports that after the U.S. implemented sanctions in response to Putin’s 2014 seizure of the Crimean Peninsula, Russia purposefully lowered its reliance on global capital flows. According to the Bank for International Settlements (BIS) in Basel, Switzerland, Russia has drastically reduced its foreign debt and bank borrowings by about half.