Early Paris Club debt repayment to save Russia $7.7 bln Kudrin

Other News Materials 21 June 2006 13:37 (UTC +04:00)

(RIA Novosti) - Repaying Russia's debt to the Paris Club of creditor nations ahead of schedule will save the country $7.7 billion, the finance minister said Wednesday.

Russia has tentatively agreed with the Paris Club to repay more than $20 billion of its debt ahead of schedule, reports Trend.

Kudrin told a conference in the Audit Chamber that by repaying $20.8 bln with a premium of $1 bln Russia would save $3.3 bln in 2007-09.

"These will be the additional revenues we will receive," Kudrin said.

However, the minister said Russia still had to reach a final agreement on early debt repayment with the Paris Club, adding that the terms and conditions would be considered at a government meeting.

Kudrin said the government was also considering early repayment of $12 billion, but said it would only save the country $4 billion.

"I am in favor of making more effective use of Russia's available resources," he said.

The minister said that the average interest Russia paid on servicing the Paris Club debt was about 6-7% and if money from the oil-windfall Stabilization Fund were placed in securities, a profitability rate of 3.5-4% could be expected.

Kudrin has consistently argued in favor of repaying the country's Soviet-era foreign debt with money from the Stabilization Fund, which was established in 2004 to accumulate windfall profits from oil prices and hold back inflation by neutralizing an influx of petrodollars.

Head of the Audit Chamber Sergei Stepashin said his agency would draft a conclusion on the early debt repayment scheme and check whether it was worth paying the $1 bln premium for the move.