Russia to Repay $3 Billion of World Bank Debt on Oil Revenue

Russia to Repay $3 Billion of World Bank Debt on Oil Revenue

By Halia Pavliva

April 14 (Bloomberg) -- Russia, the world's biggest energy exporter, plans to repay early about $3 billion owed the World Bank as oil and gas revenue help ease the country's debt burden, Deputy Finance Minister Dmitry Pankin said.

``There are plans over the early repayment and there are mutual agreements on that,'' Pankin said at a press briefing in Washington at the spring meetings of the International Monetary Fund and World Bank. ``We expect to repay about $3 billion in June and may repay more later in the year.''

Russia is using windfall revenue from energy exports to lessen a debt load amassed in the Soviet era and a period of economic malaise after the fall of communism. The International Monetary Fund predicts the Russian economy will grow 6.8 percent this year, faster than the 0.5 percent rate of expansion in the U.S. and 1.4 percent for the euro zone.

Russia's total debt to the bank of about $4.5 billion includes $3 billion in ``mono-currency loans that we will repay first,'' Pankin said. ``Estimation of multicurrency loans raises some questions and takes a long time, and lots of efforts. Still, we will keep calculating them and may repay some,'' he said.

Urals crude, Russia's major export blend of oil, has surged more than 10-fold since 1998 to $104.72 a barrel April 11. Russia's sovereign oil funds held $163.4 billion on April 1.

Russia plans to reconsider initially planned agreements with the World Bank and switch to financing the projects designed by the bank with Russia's domestic resources, Pankin said earlier.

Soviet Debt Exchange

Pankin also said Russia may set a deadline for accepting claims to exchange as much as $700 million in Eurobonds for former Soviet debt for mid-2008, enabling more creditor companies to take part.

``The idea is to get done with it,'' Pankin said. ``This work has been proceeding very slowly and it is not easy.''

The government has yet to approve a resolution allowing the ministry to swap the debt, Pankin said, adding that he expects the measure will be approved by the end of the month and a deadline set as soon as July.

The government initially wanted to exchange this portion of the debt by the end of 2005. The Finance Ministry said then that it had as much as $2.5 billion of former Soviet debt that it wanted to exchange for Eurobonds at a discount in order to cut its foreign debt and help spur economic growth.

In 2001 and 2002, Russia swapped about $1.3 billion in Eurobonds maturing between 2010 and 2030 for part of the debt. The debt was accumulated by Soviet foreign trade agencies that then defaulted as the communist regime collapsed.

South Korea, Libya

Russia plans to begin talks with South Korea on repayment of Russia's about $1.3 billion debt by June, Pankin said. Russia will also ask Libya to repay its debts when the Finance Ministry's delegation visits Tripoli later this week.

``So far, our positions are different,'' Pankin said, declining to comment further. ``The talks are not even about size of the debt.''

Russia's foreign currency and gold reserves, the world's third largest, rose to a record $508 billion last week. The reserves have climbed from $17.8 billion on Jan. 1, 1998, when crude sank to less than $10 a barrel and the government was forced to default on $40 billion of domestic debt and devalue the ruble, sending the economy into recession.