According to a government official, the United States is considering allowing a critical waiver to expire next week to prevent the Russian Federation from repaying U.S. bondholders and causing the country to default.

Despite sanctions from Western governments imposed on Russia due to the Russian military action currently being conducted in Ukraine, the Kremlin has still managed to repay its debts to those international bondholders.

Next Wednesday, May 25, a waiver allowing Russia to make those payments is set to expire. According to an unnamed government official speaking to Reuters, it may not be renewed.

“It’s under consideration but I don’t have a decision to preview at this time. We are looking at all options to increase pressure on [Russian President Vladimir] Putin,” the official told the news agency.

The situation presents an interesting scenario in which Russia wants to pay its obligations but would not be allowed to do so.

The next debt payment is scheduled to be on May 27 to cover foreign bonds that mature in 2026 and 2036.

Russia is allowed to pay in U.S. Dollars, Euros, British Pound Sterling, or Swiss Francs, but not Rubles, as sanctions restrict their ability to do so.

The potential default would have minimal effect on the country’s business dealings. Russia receives far more money from oil, natural gas, and other commodity sales than the debt payments would cost.

Moscow’s intent to repay the debt is seen as an attempt to uphold its reputation worldwide and as a matter of pride.

The last time Russia defaulted on foreign debts was 105 years ago, in 1917, after the Russian Revolution. When the Bolsheviks took power, they immediately declared all obligations owned to foreign investors by the Tsarist government of Nicholas II to be invalid.

According to Bloomberg U.S., some treasury officials argued that the exception allowing the payments should be reinstated to redirect money out of the country that would otherwise be used for the war in Ukraine.

However, the administration eventually decided that continuing to exert financial pressure on the Russians would be the preferred course of action.

The total amount of foreign debt due to be repaid by Russia by the end of June is approximately $490 million.

According to Carlos de Sousa, an investor at Vontobel Asset Management in Zurich, a Russian default on that debt is expected.

“It continues to be our baseline scenario that a default will happen. I don’t know why the US would renew the carve-out,” De Sousa said.

“Russian sovereign debt is very low; they still have resources and some money flowing in. So for them to continue to service the debt is not too onerous. The Russian government just wants to keep the reputation,” he said.

The exact plans by the Treasury Department remain to be seen, and they have denied comment on the matter entirely ahead of next week’s decision.