November 15, 2004
Washington: Russia’s macroeconomic performance in recent years now allows it to begin repaying its debt early.
“Given Russia’s strong external position, we will welcome an early repayment of Russian debt to the IMF,” said IMF Managing Director Rodrigo de Rato to Itar-Tass.
De Rato expects to discuss the repayment schedule with Russian officials during his visit to Moscow on November 16-18. It will be his first visit to Moscow since being appointed as the head of the IMF.
De Rato is convinced that the current high oil prices make it beneficial for Moscow to repay some of its external debts early and avoid future interest rate payments. “We believe that’s a very good strategy that will have an immediate effect of making it cheaper for Russia to service its debt,” he emphasised when asked how Russia can best utilise its revenues form oil sales. Currently such revenues are pooled in a stabilisation fund.
The IMF does not advise that money from the fund be used to cover immediate needs. “Nevertheless, if the decision will be to use some of that, in our opinion, it will have to be directed to investment that will enhance Russian potential growth, and those investments should be very carefully listed and analysed in a transparent and efficient way,” de Rato said. He added that the IMF advises Russian authorities to guarantee that investments will support structural change.
Russia also has a debt it needs to pay back to the Paris Club. Moscow has recently talked of the possibility of securitising its debt. And Germany has already started doing just that with part of its bilateral claims with Russia.
Asked to comment, de Rato answered that such issues are “a question between creditors and debtors,” and do not directly concern the IMF. He thinks they should be discussed within the framework of the Paris Club, taking into account the interests of all parties, not just Russia and Germany.
“We advise that unilateral movement should be limited, and we believe that those strategies to securitise debt should be discussed in a more multilateral framework,” de Rato said.
The Paris Club and other creditor countries are also discussing ways of providing Iraq with debt relief. “At the end of the day it’s a question of international solidarity,” de Rato stated and added, “it’s a political decision that has to be taken.”
De Rato believes Russia can contribute to the effort to reduce Iraq’s debt relief. He said his opinion is based on Moscow’s largess to other poor indebted countries, most recently Ethiopia.