With Russia close to its first debt default since 1998 as energy prices have risen since the war with Ukraine, the fund added $3.4 billion in additional oil and gas revenue to cushion the sanctions-hit economy.

Moscow said on Sunday it would add an additional 273.4 billion rupees ($3.4 billion) to its pre-emptive fund, with 271.6 billion rupees coming from oil and gas revenue in the first quarter of this year.

The government said the additional funding “will be used to implement measures aimed at ensuring economic stability in the context of external sanctions”. Russia’s economy could contract by 10% this year, according to a consensus forecast by economists.

Still, in the face of tough economic sanctions imposed by Western countries and their partners, commodity exports and tough capital controls have helped Moscow stabilize its currency and prevent a financial collapse.

Russia’s economy has so far been buoyed by oil and gas revenues and strict capital controls, which have prevented most foreign traders from pulling out of their investments.

However, S&P Global Ratings downgraded Russia’s credit profile to “selective default” at the end of the week after Moscow announced it would repay its latest tranche of foreign bonds, denominated in dollars at maturity, in rubles.

Russia has continued to repay its dollar bonds since the invasion began, confusing many investors over expectations that Western sanctions and Russian currency controls will lead to the country’s first default on foreign-currency debt since 1998.

But last week, Moscow was supposed to pay $84 million in coupons and $552 million in maturing bonds, in rubles instead of dollars after U.S. authorities blocked U.S. banks from processing the payments.

Moscow has a 30-day grace period to give cash to investors before defaulting, but S&P said that was unlikely.

“We currently expect that investors will not be able to convert these rouble monies into U.S. dollars equal to the amount originally due, or the government will convert these monies into U.S. dollars within a 30-day grace period,” S&P said in a note.

“Sanctions against Russia are likely to increase further in the coming weeks, hindering Russia’s willingness and technical ability to meet the terms and conditions of its obligations to foreign debt holders,” it added.

The U.S. last week imposed its toughest sanctions on Russia’s largest financial institution Sberbank and the country’s largest private bank Alfa-Bank, preventing lenders from doing business with any U.S. institution or individual. It also bars any new U.S. investment in Russia.

The EU also approved a fifth set of sanctions late last week, including an import ban on Russian coal.

A default is considered selective when it affects some international repayments but not others.

Russia has said any default – if it occurs – will be “artificial” because it has the ability to pay, but if its reserves remain sanctioned, it will be paid in rubles.

Ratings agency Fitch warned last month that attempting to pay U.S. dollar interest in Russian currency would signal a “default or default-like process has begun.”

Additional reporting by Valentina Romei in London