VLADIMIR PUTIN has been obliged to reverse his position on the use of foreign cash reserves in order to avoid a collapse in debt defaults.

Moscow owes millions of dollars on two government bonds that will mature in 2022 and 2042. However, Russia originally sought to pay the bond due on April 4 in roubles rather than US dollars, as the bond’s contract requires.

Russia’s Finance Ministry announced on Friday that it had attempted dollar payments for its payments.

According to Reuters, the ministry paid $564.8 million (£450 million) on a 2022 Eurobond and $84.4 million (£67 million) on a 2042 Eurobond.

The payments have apparently been routed through Citibank’s London branch, although it is uncertain whether they will reach their intended receivers.

The payments were due in April and had a 30-day grace period before going into default on May 4.

Bloomberg reports that the US Treasury has approved about $650 million (£518 million) in coupon and principal payments as part of its campaign to push Russia to drain local reserves.

According to the site, investors have begun to receive late payments on the two bonds, indicating that Russia has effectively avoided a financial default.

Failure to pay in dollars, according to major rating agencies, would mark the first international loan default since 1917.

Russia also appeared to avoid a historic default in March, when it paid $117 million (£93 million) in interest payments on two dollar-denominated government Eurobonds.

Dmitry Peskov, a Kremlin spokesperson, claimed at the time that any default would have been “purely artificial,” because Russia had the cash to meet its external debt obligations but would be barred from doing so due to Western sanctions.

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