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. Last Updated: 07/27/2016

Russia Closes the Books on $19.5Bln IMF Odyssey

Russia dipped into its so-called stabilization fund for the first time to repay early its remaining $3.3 billion debt to the International Monetary Fund, Finance Minister Alexei Kudrin said Tuesday.

"Yesterday, we repaid all our debt to the IMF," Kudrin told reporters.

Russia's debt to the IMF peaked at about $19.5 billion in October 1998, two months after the government rocked the global financial system by devaluing the ruble and defaulting on more than $40 billion in domestic debt.

The government used windfall revenue from sales of oil, Russia's major export commodity, to pay debt that was scheduled to come due in 2005-2008, Kudrin said. The move saved the country $204 million in interest, he added.

The government accumulates windfall revenue from oil exports and budget surpluses in the stabilization fund that is earmarked for debt repayment. Kudrin said the fund totaled 740 billion rubles ($26.5 billion) as of Feb. 1.

Russia has boosted oil output by about 50 percent since 1998 to become the world's top supplier after Saudi Arabia.

Russia won a long-awaited investment-grade credit rating from Standard & Poor's on Monday, with the agency saying improved debt levels outweighed political risks. Kudrin is also trying to negotiate early repayment of some of Russia's $44 billion debts to the Paris Club of sovereign lenders.

Debt talks in Paris last month ended without result, with creditor nations apparently reluctant to accept Russia's demand for a 10 percent "haircut," or discount, for early repayment, sources said.

Kudrin has said he would push his debt-reduction agenda at a meeting of the Group of Seven rich nations in London this week.

With gold and foreign exchange reserves of $119 billion, the largest outside Asia and more than it owes, Russia is well-placed to pay down debt.

(Reuters, Bloomberg, MT)