Russia reached a deal with major creditors on Friday to pay off US$15 billion of its foreign debt over three months, consolidating the country's steady return to a sound financial footing.
The debt buyback, approved by the Paris Club of creditor nations after three days of talks, will save Moscow US$700 million in annual interest payments beginning next year, senior Russian negotiator Sergei Storchak said.
Paris Club president Jean-Pierre Jouyet said the deal underlined how far Russia had come since it was forced to reschedule repayments on its mostly Soviet-era debt in 1999, in the wake of a financial crisis and currency devaluation.
"Five years ago, nobody would have imagined that we'd now be in a position to reach such an agreement on such a large sum," Jouyet said.
The deal is part of a Russian drive to improve its financial standing and reduce borrowing costs. Finance Minister Alexi Kudrin confirmed that the June-August buyback will be funded by the government's 860 billion-ruble (US$31 billion) "stabilization fund" -- boosted by the soaring oil prices and export revenues of the past two years.
"This settlement is very lucrative for Russia," Kudrin said in Moscow.
Russia's debt is equally lucrative for creditors, thanks to its high interest rates. Germany, its biggest Paris Club creditor, was initially reluctant to forego future interest revenue on its euro5 billion (US$6.3 billion) share of the deal and was holding out for an extra premium in exchange for the early repayment, said a person close to the talks.
The final buyback deal, at face value, was finalized after Germany dropped its demand on Wednesday, said the person, who spoke on condition of anonymity.
Berlin's strained public finances are in need of a cash injection -- a factor Russia tried unsuccessfully to exploit when it proposed last year to buy back Paris Club debt at a discount to face value, only to be turned away.
"Germany welcomes this decision, both in terms of the size of the repayment and the timing," said German Deputy Finance Minister Caio Koch-Weser in Luxembourg, where he was meeting with other EU finance officials.
The Paris Club said participation in the buyback remains voluntary for members, but an "overwhelming majority" including Germany and Italy -- Russia's No. 2 creditor in the group -- have already committed themselves.
The agreement reduces Russia's Paris Club debt to US$25 billion and its total foreign debt to about US$100 billion. Moscow hopes it will lead to improved credit ratings, reducing the cost of future borrowing.
"It's the right time," said Storchak, who heads the Finance Ministry's international financial relations department. Moody's raised Russia's foreign-credit rating to investment grade in late 2003, followed by Fitch a year later and Standard and Poor's in January this year.
Storchak said Moscow hopes to buy back another US$6 billion to US$10 billion in Paris Club debt.
When Lika Megreladze was a child, life in her native western Georgian region of Guria revolved around tea. Her mother worked for decades as a scientist at the Soviet Union’s Institute of Tea and Subtropical Crops in the village of Anaseuli, Georgia, perfecting cultivation methods for a Georgian tea industry that supplied the bulk of the vast communist state’s brews. “When I was a child, this was only my mum’s workplace. Only later I realized that it was something big,” she said. Now, the institute lies abandoned. Yellowed papers are strewn around its decaying corridors, and a statue of Soviet founder Vladimir Lenin
UNIFYING OPPOSITION: Numerous companies have registered complaints over the potential levies, bringing together rival automakers in voicing their reservations US President Donald Trump is readying plans for industry-specific tariffs to kick in alongside his country-by-country duties in two weeks, ramping up his push to reshape the US’ standing in the global trading system by penalizing purchases from abroad. Administration officials could release details of Trump’s planned 50 percent duty on copper in the days before they are set to take effect on Friday next week, a person familiar with the matter said. That is the same date Trump’s “reciprocal” levies on products from more than 100 nations are slated to begin. Trump on Tuesday said that he is likely to impose tariffs
HELPING HAND: Approving the sale of H20s could give China the edge it needs to capture market share and become the global standard, a US representative said The US President Donald Trump administration’s decision allowing Nvidia Corp to resume shipments of its H20 artificial intelligence (AI) chips to China risks bolstering Beijing’s military capabilities and expanding its capacity to compete with the US, the head of the US House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party said. “The H20, which is a cost-effective and powerful AI inference chip, far surpasses China’s indigenous capability and would therefore provide a substantial increase to China’s AI development,” committee chairman John Moolenaar, a Michigan Republican, said on Friday in a letter to US Secretary of
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) market value closed above US$1 trillion for the first time in Taipei last week, with a raised sales forecast driven by robust artificial intelligence (AI) demand. TSMC saw its Taiwanese shares climb to a record high on Friday, a near 50 percent rise from an April low. That has made it the first Asian stock worth more than US$1 trillion, since PetroChina Co (中國石油天然氣) briefly reached the milestone in 2007. As investors turned calm after their aggressive buying on Friday, amid optimism over the chipmaker’s business outlook, TSMC lost 0.43 percent to close at NT$1,150
RSS