Putin orders government to sue Ukraine if defaults on $3bn debt

President Vladimir Putin on Wednesday ordered his government to sue Ukraine if the ex-Soviet republic defaults on its $3 billion (about 2.7 billion euros) debt to Russia.

"Go ahead, take it to court," Putin told Finance Minister Anton Siluanov at a government meeting while discussing the loan given to former Kremlin-backed president Viktor Yanukovych in 2013, which must be repaid this month.

The dispute has been hampering the International Monetary Fund's $17.5-billion rescue plan for Ukraine, which restricted Kiev's ability to restructure billions of dollars in debt, including some held by Moscow.

Both Siluanov and Prime Minister Dmitry Medvedev had previously called for Moscow to sue Kiev in the event it would default on its payment.

In a televised interview on Wednesday, Medvedev said he thought Moscow and Kiev had "almost no chance" to come to an agreement on the outstanding debt.

"But we will keep trying to reach an agreement until the very end of December," Medvedev added.

The Kremlin on Tuesday said it had made its last offer to Ukraine on restructuring its debt but that its offer had been rejected.

Russian President Vladimir Putin last month said Moscow was ready to spread out the repayment over three years after initially demanding that Kiev make good on the full amount by late December.

Meanwhile the IMF on Tuesday changed a rule that would have blocked its financial aid program to Ukraine in the event the country defaulted on its debt to Russia.

Until now, the IMF could not provide financing to a member country that was in arrears to an official creditor, such as a government.

Moscow blasted the IMF decision, saying it enabled Ukraine to miss debt payments to Russia without impacting its bail-out program.

Siluanov called the decision "hasty and biased" and deplored that it legalised the possibility of Kiev defaulting on its debt.