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21 Aug, 2006 08:25

$7.5 billion saved as Russia pays early

$7.5 billion saved as Russia pays early

Monday marked the deadline for Russia to repay its $22 billion debt to the Paris Club group of creditors. Payments began last week, on the eighth anniversary of the 1998 default.

As Russia settles its financial obligations, it is laying to rest memories of the times it failed to pay up, repairing its credit history and establishing a reputation for sound economic management.

Vneshekonombank has transferred more than $1 billion to the Paris Club’s informal assembly of 19 creditor states – from a debt that turned out expensive to service. Paying back earlier than planned will save Russia more than $7.5 billion in interest.

Analysts said Russia should return the money while net capital inflow was strong. After repaying the club, Russia will have just $3-4 billion  of Soviet-era debt to clear.