The Executive Board at International Monetary Fund (IMF) has stated that a bond sold by Ukraine to Russia is an official sovereign debt.

The latest confirmation from IMF puts further pressure on Ukraine on restructuring talks with Russia. IMF's Executive Board has also clarified that Russia's Ukraine bond is not a commercial bond, but sovereign debt.

In 2013, Russia bought $3 billion bonds from Ukrainian government run by former President Viktor Yanukovych. The latest IMF confirmation came at a time when Ukraine is about default on the bond due on 20 December. 

According to a report by Bloomberg, Ukraine is believed to have offered Russia 20 percent principal write down as part of the restructuring terms. However, Russia is insisting on payment in total.

The IMF board has changed its policy on 8 December. As part of the new policy, debtor country should ensure good faith efforts to restructure the debt, which means Ukraine has to overcome the damaged relations with Russia. So that Ukraine can reach a bilateral agreement on the debt. 

The latest modifications to IMF policy on non-toleration of arrears clearly state that the official creditors will have direct consequences for Ukraine's debt to Russia, as reported by KyivPost. It also allows Ukraine to access further financial support without a full pact with Russia on $3 billion debt. 

Russia has sought clarification from IMF after seeing the attempts to proclaim the debt as commercial. Moscow bought $15 billion worth Ukrainian Eurobonds ($billion in the first phase) has been struck between Ukraine's former President Viktor Yanukovich and Russia President Vladimir Putin. 

As per a report by RT, Russia may sue Ukraine in case it fails to pay by 20 December. IMF in a statement said: "In the case of the Eurobond, the Russian authorities have represented that this claim is official. The information available regarding the history of the claim supports this representation."

IMF's decision automatically came into force from 17 December as no objections to considering the debt as sovereign had been voiced. Putin had earlier ordered a lawsuit against Ukraine to be filed if it doesn't pay with a 10-day grace period. 

The IMF's Executive Board comprising 188 member nations has decided that Ukraine bond held by Russia should be considered as sovereign debt rather than a commercial bond.

Russia's National Wealth Fund has purchased the Ukraine bond. The National Wealth Fund acts on behalf of the Russian government.