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. Last Updated: 07/27/2016

Russia to Skip Payment to Paris Club

Russia won't make its first-quarter payments this year on the billions of dollars of debt owed to nations collectively called the Paris Club, a government spokesman was quoted as saying Thursday.

But the decision "does not mean and has nothing to do with a declaration of default," Interfax quoted Gennady Yezhov, spokesman for Finance Minister and Deputy Prime Minister Alexei Kudrin, as saying.

"A decision on the former USSR's debts will be found after an International Monetary Fund mission comes to Moscow in late January or early February," he said.

Russia owes about $48 billion to the Paris Club countries, racked up by the Soviet Union. The debt was defaulted on in the 1991 collapse of the Soviet Union and again in the August 1998 financial crisis in which the ruble's value plunged.

But Russia's economy has shown signs of significant growth over the last year and the reason for the delayed payment was not announced. Yezhov could not be reached for clarification and the ministry said no one else was qualified to comment.

Russia owes about $3.5 billion in interest payments on the debt this year, and the missed first-quarter payment amounts to about $1.5 billion.

The Russian parliament last year passed a balanced budget for 2001, the country's first ever, and some analysts speculated that the missed payment reflected unwillingness to tamper with what was considered a historic achievement.

"They don't want to change the budget assumptions," analyst Sergei Voloboyev of Credit Suisse First Boston told Dow Jones Newswires.

The government last year collected about $11 billion more in revenues than it had projected and officials had said foreign debts could be paid from such unexpected income, even though debt payments were not included in the 2001 budget.

However, other politicians and analysts have warned that Russia's economic boost has come partly from high world prices for oil, one of the country's major exports, and that these revenues could collapse if the oil market falls.

Prime Minister Mikhail Kasyanov last year gave strong support to a proposition to trade shares in some of Russia's major companies for foreign debt. But Kudrin has thrown cold water on the idea, saying last year that "there can be no thought" of such a swap.

Russia's total foreign debt, including to the Paris Club, is about $148 billion. The huge amount is an impediment to the country's development and an embarrassment to President Vladimir Putin's attempts to restore Russia's credibility.

That credibility was further undermined last month when the IMF failed to reach an agreement with Russia on new loans. That was seen as a sign of international doubt about Russia's economic reforms and took away some of Russia's leverage for negotiating debt rescheduling