Moscow is willing to spend 35 billion euros in three years to pay off its debt to the members of the Paris Club

Monday, August 19, 2019

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According to a representative of the German government, an agreement on early payment of the debt might be signed by the end of this week. The agreement envisions that Russia will pay 10-15 billion euros every year. According to a Vedomosti source in the Paris Club, the latest consultations on this issue between the Russian delegation and the creditors were held in Paris on Tuesday. The mechanism of the early debt payment is described in the addendum to the 2005 Budget. However, the articles of the addendum are confidential, two Russian parliamentarians told Vedomosti. One of them said that Russia had pledged to spend $15 billion on paying off the debt in 2005. Nevertheless, Deputy Chairman of the Budget Committee Mikhail Zadornov doubts that Moscow will be able to reach a quick agreement with the Paris Club because, unlike Germany, Italy and France that are experiencing budget spending problems, some of the creditors are not interested in Russia repaying its debt ahead of schedule. The early payment of the debt will sharply improve Russia's macroeconomic indicators, experts claim. For instance, analysts of the United Financial Group believe that the early payment of the debt will be "good news accompanied by a bouquet of favorable macroeconomic consequences." Clearing the Paris Club debt will allow Russia to spend future budget revenues on internal needs. However, it will be more difficult for Russia's financial authorities to deal with monetary liquidity after that, they add. According to Finance Ministry data, the Russian debt to members of the Paris Club was $47.7 billion (35.6 billion euro) at the beginning of 2004. Germany is the biggest creditor of Russia ($20.3 billion). In addition, Russia owes $5.7 billion to Italy, $3.7 billion to Japan, $3.5 billion to the United States, and $3.4 billion to France

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