Russia May Have to Spend More Than Planned USD 17.3 Billion on Servicing Foreign Debt in 2003

Russia may spend more than the USD 17.3 billion planned in the draft federal budget on servicing its foreign debt in 2003. Russian Deputy Finance Minister Sergei Kolotukhin made this announcement today at a sitting of the Duma commission on foreign debt and foreign assets.

The deputy minister explained that in calculating the repayment of foreign debt the Government based its figures on a defined exchange rate of the euro against the dollar. However, the value of the euro is now almost level with the dollar. 'If the euro continues to strengthen, this will inevitably be reflected in the budget figures, as a significant proportion of Russia's foreign debt is held in euros,' said Kolotukhin. In addition, the draft budget's authors fear that interest rates on world markets will rise slightly in 2003, also making servicing of the debt more difficult.

Kolotukhin did not rule out that the Government might ask deputies to introduce corresponding adjustments into the draft budget, which is to receive its first reading on September 25.