Russia's prime minister orders talks on paying Paris Club debt

Russian Prime Minister Mikhail Fradkov has ordered negotiations started on paying down US$12 billion (10 billion euros) of his country's debt to the club of creditor nations, Finance Ministry officials said Thursday.

Photo: Russia's prime minister orders talks on paying Paris Club debt

Negotiations with countries of the Paris Club creditors could begin in the near future, a Finance Ministry spokeswoman told The Associated Press.

The planned sum constitutes a large chunk of Russia's $25.2 billion (21 billion euros) outstanding debt to the Paris Club, which also includes some 6 billion euros (US$7 billion) that the German government has converted into bonds, the spokeswoman said. She declined to give her name, citing the ministry's policy.

Russian officials have said they would use money collected in a special oil revenue fund to pay the country's Soviet-era debt to the Paris Club. Russia has seen its finances rebound since an economic collapse in 1998, largely thanks to high prices for oil and gas, its main exports.

Moscow seeks to retire the debt early, while several creditor countries have asked Russia to pay a premium to compensate them for lost interest payments.

Vladimir Dmitriyev, chairman of state-controlled Vneshtorgbank which deals with foreign debt payments, expressed optimism for the planned negotiations.

"Members of the Paris Club have shown political will to meet Russia halfway and settle the debt ahead of time," Dmitriyev was quoted as saying by the RIA-Novosti news agency.

In May 2005, Russia reached a deal to pay off US$15 billion (13 billion euros ) of the US$43 billion (36 billion euros) in Soviet-era debts it owed to the Paris Club, the AP says.