New tranche of financial aid from the International Monetary Fund to Ukraine will be voted against by Russia, Russian Finance Minister Anton Siluanov said on Monday.
But minister also said they are willing to discuss an out-of-court settlement over Kiev's debt to Moscow.
The IMF will decide on September 14 whether to release a loan tranche to Kiev which could amount to as much as $1.7 billion.
Russia has filed a lawsuit against Ukraine at London's High Court in February demanding repayment of a $3 billion Eurobond, which matured in December last year, after Kiev insisted that Moscow must accept restructuring terms agreed with other foreign creditors.
Speaking to journalists at a briefing, Siluanov claimed Ukraine had never met the condition needed for the new IMF policy to work, so the IMF shouldn’t deliver its aid to Ukraine."It's possible that the Fund does not have full information about the scope of the (Russia-Ukraine) negotiations, although that would be strange,"
Siluanov said, adding that Russia would send a letter to the IMF Managing Director Christine Lagarde explaining its position."We will vote against this (approving loan tranche) as we believe it is not compliant with the rules,"
Ukraine argues that the original loan agreement was invalid because Russia applied economic and political pressure on it in 2013 to accept it."I doubt Russia can block the next IMF disbursement, as (it is) likely Western countries supporting Ukraine have a majority and would be willing to force this through, but it makes life uncomfortable for the IMF board and we might see an attempt to stall, (to) further review the decision,"
Timothy Ash, chief emerging markets strategist at Nomura in London, said in a note.
The first court hearing is scheduled for Jan. 17.