The United States is unlikely to extend a license that allows Russia to pay U.S. bondholders, Treasury Secretary Janet Yellen said on May 18.
Moscow faces deadline on May 25 when the license allowing it to make payments to U.S. bondholders is due to expire. Failure to make the payments could put Moscow closer to defaulting on its debt.
Yellen, who is on a visit to Europe meant to address the effects of the war in Ukraine, spoke in Germany ahead of a Group of Seven (G7) finance ministers meeting in Bonn.
Asked by reporters if the United States would allow the license to expire, Yellen said: "There's not been a final decision on that, but I think it's unlikely that it would continue."
But she added that if Russia is unable to make the payments and it defaults, it would not represent a significant change in Russia's situation because the country is already cut off from global capital markets.
Russia has so far managed to make its international bond payments even though Western sanctions ban transactions with the Russian Finance Ministry, central bank, or national wealth fund.
Yellen also noted risks to the world economy brought on by the war, which has touched off a sharp increase in energy and food prices that are contributing to a slowdown in growth.
“The economic outlook globally is challenging and uncertain,” Yellen said. “And higher food and energy prices are having stagflationary effects, namely depressing output and spending and raising inflation all around the world.”
To address concerns about food shortages, the United States, several global development banks, and other groups on May 18 unveiled a multibillion dollar plan that aims to prevent starvation prompted by the war, the U.S. Treasury Department said.