Russia to Pay Off Paris Club Debt
// To become a full-fledged member of the Big Eight
Finance Minister Alexey Kudrin is expected to announce the latest proposal to foreign creditors for an early repayment of up to $12 billion of the debt of Russia to the Paris Club to coincide with the meeting of G8 finance ministers in Moscow February 10-11. Before an official proposal can be made, however, consultations have to be made with Paris Club member states. Kommersant has information that Kudrin discussed this issue with the finance ministers of Italy and France in January, however, the size of the tranche was not expected to be so large.
The Wall Street Journal yesterday cited a Finance Ministry source as saying that, like the $15-billion payment Russia made in 2005, the next payment will be made from the stabilization fund, which is currently worth $44 billion. Russia's debt to Germany will not be affected by the payment, since it was converted into Aries securities worth $7 billion (ˆ5 billion) in 2004.
It is assumed that the entire sum of the payment to the Paris Club countries will be used for World Monetary Fund and World Bank programs to aid the world's poorest countries, the HIPC initiative and similar efforts. The Wall Street Journal also reports that Russia will become a major donor within the framework of the G8. One of the goals of the debt payment is to refute the opinion that Russia's economy is too weak compared to the members of the G7 to participate in such programs. On February 7, Kudrin announced that, besides proposals were being prepared for the Paris Club, Russia intended to write off the debt of a number of African countries, specifically Zambia, Benin and Tanzania to the tune of $688 million, as part of the HIPC initiative.
It is possible that the semi-secret nature of the talks on the debt is related to Russia's intention to exchange the debt money for some sort of foreign policy concession. That may be related to Russia's efforts to enter the World Trade Organization.
Dmitry Butrin, Petr Netreba
All the Article in Russian as of Feb. 09, 2006
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