Oil Profits Help Russia Pay Off Soviet-Era Debt

MOSCOW – Eight years after it defaulted on more than $40 billion in debt and slid into financial chaos, Russia transferred $23.7 billion to the Paris Club of creditors Monday, wiping out the last of its Soviet-era debts and underlining the extent to which oil and gas revenue has transformed the country’s finances.

The state-owned bank Vnesheconombank transferred the money, including a $1 billion early payment fee. The debt clearance, plus a repayment in 2005, will save the country more than $12 billion in interest payments on debt that was not due until 2020, the Finance Ministry said in a statement.

“The early settlement with creditor countries was possible thanks to the Russian Federation’s growing financial and economic might,” the ministry said, adding that the payment “would strengthen Russia’s international authority.”

In May 2005, Russia paid back $15 billion and began negotiating to clear the rest of its debt to the creditor group.

Washington Post