Russia makes final payment of 21.6 billion USD to Paris Club of Creditors

According to an official statement released by the Russian Finance Ministry today, Russia has paid off the last of its Soviet-era debts to the Paris Club of Creditors. The ministry said in a statement that it had transferred the last tranche - US$21.6 billion (€17 billion) - to the club's 17 members.

Photo: Russia makes final payment of 21.6 billion USD to Paris Club of Creditors

As a result, Russia stands to save US$7.7 billion (€6 billion) overall from the early retirement of the debt, which the government plans on spending on infrastructure projects. In May 2005, Russia paid back US$15 billion (€12 billion).

"The early settlement with creditor countries was possible thanks to the Russian Federation's growing financial and economic might," the ministry said. Early payment "would strengthen Russia's international authority," it said.

After relying on foreign loans for much of the 1990s and defaulting on its sovereign debt almost exactly eight years ago, Russia's finances are in good health, thanks to record world prices for oil and gas - its main exports.

The ministry noted that Russia was running a budget surplus, that its hard currency reserves were the third largest in the world and its economy was growing at a healthy clip of 6 percent to 7 percent per year, the AP said.

Russia had announced in June that it had reached a deal with the Paris Club on repaying the debt early, bolstering its economic clout ahead of the Group of Eight summit in St. Petersburg in July.