Russian govt. to discuss early payment of Paris Club debt

Other News Materials 22 June 2006 10:47 (UTC +04:00)

(RIA Novosti) - Russia's government will discuss pre-term payment of the country's debt to the Paris Club of creditor nations at a meeting Thursday, a Cabinet source said.

Russia has reached a preliminary agreement with the Paris Club to repay more than $20 billion of its debt ahead of schedule, reports Trend.

Repaying the debt early will save the country $7.7 billion, Russia's Finance Minister said Wednesday. Alexei Kudrin told a conference at the Audit Chamber that Russia would save $3.3 bln in 2007-09 by repaying $20.8 bln with a premium of $1 bln now.

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

In mid-August, Russia will pay $1.2 billion of its $22 billion debt on schedule, and at the end of the month it might cover the rest of the sum - $20.8 billion - ahead of time. Russia expects to pay 51.4% of the debt at par value.

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.

But a report in leading business daily Vedomosti Monday cited an anonymous government source as suggesting Prime Minister Mikhail Fradkov had vetoed the pre-term repayment because Russia's creditors were demanding a premium for accepting early payment.

Russia joined the Paris Club in 1997. In 1993, the Russian government said it would recognize the Soviet Union's foreign debt and repay it in full.

In 2005, Russia repaid $15 billion of the debt in nominal terms, which was the largest transaction in the 50-year history of the Paris Club.