Russia to pay some of its debt to Finland ahead of schedule

Minister of Finance Kudrin promises investment protection agreement in near future

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Russia has expressed a desire to pay off ahead of schedule its USD 44 billion debt to the 19 creditor countries of the so-called Paris Club, including Finland.
      "We are in talks with the Paris Club, but I cannot reveal any details at this stage", says Russian Minister of Finance Aleksei Kudrin after having met his Finnish colleague Antti Kalliomäki (SDP) in St. Petersburg on Tuesday.
     
In January, Russian President Vladimir Putin reiterated the goal to pay off the country's foreign debt as quickly as possible because of the disadvantageous interest levels.
      In return for speedy repayments, Russia hopes to be granted debt reductions.
      At the end of January Russian central bank's gold and currency reserves were just under USD 130 billion, whereas the country's foreign debt in October 2004 totalled USD 113 billion.
     
According to Kalliomäki, the arrangements with the Paris Club could cover maybe a third of what Russia owes Finland, in other words about EUR 200 million.
      "We would have use for the money", Kalliomäki states, but refuses to further speculate on negotiations that are "at a delicate stage".
      Russia's biggest creditor Germany's dues amount to USD nine billion.
      Russia's paying off its foreign debt is very much an internal policy issue. According to government councillor Raine Vairimaa from the Ministry of Finance, the repaying of the debt might even take place later this year.
     
Apart from the Paris Club negotiations, Finland and Russia have been preparing a new agreement on paying back USD 30 million of Russia's debt in deliveries of scientific instruments and services.
      This agreement is due for signing in March.
      At the press conference Kudrin surprised his Finnish counterpart by announcing that Russia would be ready to sign a bilateral investment protection agreement with Finland "within two to three months".
      The investment protection agreement has been hanging in the air since 2002, when Putin postponed its signing until Russia's joining the WTO had been settled.
      "The agreements have to be in line with the WTO membership and Russia's partnership with the European Union. But we are ready to sign such bilateral contracts with various countries", Kudrin affirmed on Tuesday.
      Kalliomäki sees Kudrin's statement as a "positive sign" but believes that Russia still wants to tie these agreements to the WTO membership.
     
In addition, Kalliomäki and Kudrin signed a contract on Tuesday, under which Finland promises EUR 2.1 million to be spent on building a furnace unit for St. Petersburg's northern wastewater treatment plant.
      Between 1992-2004 Finland has supported the developing of St. Petersburg's waterworks to a total of EUR 26 million.


Previously in HS International Edition:
  Prime Minister Vanhanen sees Finnish-Russian ties as closer than ever (27.10.2004)
  Finnish companies more interested in investing in Russia (12.5.2004)
  Halonen meets Putin - Russia backs out of investment protection treaty pending WTO membership (27.5.2002)
  Investment protection agreement with Russia may fall through (24.5.2002)

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