Russia has been blocking the International Monetary Fund's USD 17.5-billion rescue plan for Ukraine, which hinges on Kiev's ability to restructure billions of dollars in debt, including some held by Moscow.
"There's little appetite in the world to let Russia, after all that has happened, take hostage the IMF program for Ukraine. It's not going to happen," the Ukrainian source said on the sidelines of the IMF and World Bank annual meetings in Lima, Peru.
Although Ukraine struck a deal in August with its four largest commercial bondholders to ease repayment on some $18 billion in debt, Russia's intransigence has threatened to scupper the entire bailout.
If the impasse is not resolved, Ukraine is set to default when the Russian-held bond comes due in December.
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The rescue funds are vital to keep Ukraine's new pro-Western government afloat and cushion the blow of a raging pro-Russian separatist war in the east.
Ukrainian Finance Minister Natalie Jaresko met her Russian counterpart Anton Siluanov in Lima, but the two failed to resolve the standoff.
"The Russian side say that they would be ready to consider options for this if (Western) sanctions on Russia are relaxed," said the source, adding that Russia had been given a two-week extension on a Wednesday deadline to decide how to proceed.