The International Monetary Fund on Thursday urged Russia and Ukraine to discuss restructuring a $3 billion debt but said the international lender was discussing reforms that might allow continued support for Ukraine even if it goes into arrears on the bond.
"The IMF encourages both sides to engage in constructive discussions on the restructuring of this bond to promote the necessary financing for the program being supported by the IMF in Ukraine and to help restore debt sustainability," IMF communications director Gerry Rice said.
The IMF's board could soon take up a long-running review of a policy that currently prohibits the Fund from lending to a country that goes into arrears on official debt, he said.
"It includes discussion of reforms that would allow the fund to lend in the presence of arrears to official bilateral creditors in carefully circumscribed circumstances," he said.
Efforts to restructure Ukraine's debt are seen as crucial to shore up its war-torn economy, following a conflict between government forces and pro-Russian separatists in the east.
Ukraine insists it will not pay the debt in full or offer better repayment terms than those offered to other creditors in restructuring talks.
A deal would allow Kiev to plug a $15 billion funding gap under an IMF-led $40 billion bailout programme.