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. Last Updated: 07/27/2016

U.S. Ex-Im Bank Ponders Restarting Loans to Russia




The U.S. Export-Import Bank is considering restarting lending to Russia and preliminary approval has been given to a $500 million loan for Tyumen Oil Co., the bank president says.


"I think you probably can do business in Russia," James Harmon said at a briefing Thursday after a four-day visit. But he said no decision on new loans had been taken by the bank yet.


The bank, which backs and extends credits for exports of U.S. products, froze new lending after last year's economic crisis, like most major creditors.


But it is looking at a $50 million credit for the government to acquire millennium bug software as well as aviation and agricultural deals.


Harmon said the Tyumen loan could finally be approved by year end. "The applications have been received and have been, on a preliminary basis, approved by the board," he added.


"The sum is a little less than $500 million," he said, adding that the funding was aimed at providing equipment to upgrade the Ryazan refinery and the Samotlor oil field.


Harmon said the U.S. Congress would be given time to comment on the loan, because of its large size, and meanwhile the Ex-Im Bank would consider the creditworthiness of the deal.


"Our goal is always to determine whether it is credible, whether we think that Tyumen can sell enough oil externally to pay for the acquisition of the equipment," he said.


Harmon praised Russia for its progress in reviving its economy. "More has been accomplished in the economy in Russia than most in the United States realize," he said.


"Without any bank capital available it is pretty impressive the economy has been able to restart itself."


He said inflation, budget performance and the current account situation were all better than he expected.


U.S. Ex-Im Bank's current $1.5 billion Russian portfolio was being serviced except for credits to one or two banks damaged by last year's crisis, which ripped through the financial sector.


Ex-Im Bank Russian credits are about 35 percent to government entities with the rest divided about equally between the energy sector and other private industry, Harmon said.


He played down reports of Russian corruption and expected a U.S. money-laundering investigation might have more to do with capital flight problems than organized crime.