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. Last Updated: 07/27/2016

2003 Debt Forecast Lowered to $16Bln

A senior government official said Thursday he expected foreign debt repayments to be as low as $16 billion next year, several billion lower than thought.

The government also approved in outline a plan to make its management of foreign and domestic debt more efficient, including the formation of a special debt agency.

Under the original schedule, Russia had been due to repay $19 billion next year, which would have been a peak year. However, it has cut the amount, partly by buying its own paper.

A senior Finance Ministry source had said Wednesday that the figure was now around $17 billion, but Deputy Finance Minister Sergei Kolotukhin said the sum could be even less.

"If the government had not actively managed the debt, then in 2003 we would have had to pay $20.5 billion," Kolotukhin told reporters after a government meeting devoted to debt problems.

The figure he quoted was above the $19 billion that had been expected for repayments in 2003, and there was no immediate explanation for the change.

"Now, after Finance Ministry operations and under a very conservative 2003 estimate, Russia should repay $17 billion, but I think it will be no more than $16 billion," Kolotukhin said.

However, a source also said the debt level could be even lower next year, closer to $14 billion or $15 billion, figures also mooted by financial analysts.

The source said this figure would depend on market interest rates being lower than expected and to the extent Russia could get debt deals with countries to which it owes money, both in the Paris Club of creditor nations and outside.

Kolotuhkin would not comment on statements by other officials that Russia has been buying back its own debt.

Some analysts said the country has cut its 2003 repayments to as low as $14 billion due to such repurchases.

The government meeting approved in outline a plan for a state debt strategy, but sent it back to officials to fine tune.

The debt plan would involve work on coordinating the management of foreign and domestic borrowings and an early warning system of possible risks on the horizon.

Kolotukhin said one of the goals of the debt strategy was to borrow more on domestic markets.

The strategy would also help in taking steps to smooth peaks in debt repayment, such as the one that had been expected next year, and to help reduce debt servicing costs.

The debt agency to be set under the plan is to be formed from state bank Vneshekonombank, which currently acts as the payment agent on foreign debts. The new agency would work in tandem with the Finance Ministry.

Kolotukhin said that according to the latest ministry estimates the total size of foreign debt at the end of last year was between $132 billion and $134 billion.

Russia said Wednesday its total debt burden was $138.1 billion in foreign loans and domestic liabilities of 531.1 billion roubles ($17.20 billion) at the end of 2001.

Finance Minister Alexei Kudrin said Wednesday that the country's debt strategy involved reducing the total debt burden to 40 percent of gross domestic product by 2005 from 51.9 percent of GDP at the start of this year and an expected 48.2 percent by the end of 2002.