Third group country

Russian enterprises will be able to receive foreign government loans on more favorable terms

Russia will not participate in the upcoming meeting of finance ministers of the most developed countries in a week and a half as a full-fledged “player”. This is evidenced by a message from Germany, which chairs the G8 this year. At the meeting scheduled in Essen on February 9-10, the Russian delegation led by Alexei Kudrin with the participation of the head of the Central Bank Sergei Ignatiev will only take part in discussing issues related to the development of bond markets in developing economies. Moreover, his colleagues from Brazil, India, China, Mexico and South Africa were invited to participate in the discussion along with Mr. Kudrin.

This, however, does not mean that the leaders of leading states followed the lead of those who would like to exclude Russia from the informal club of the powerful immediately after the end of its chairmanship. From the same message from the current presiding party it follows that the May meeting of finance ministers in Potsdam, as well as the summit in June in Heiligendam (northern Germany), will be held in the G8 format. Let us recall that last year Russia did not participate as a full member in all meetings of finance ministers.

In Essen, the finance ministers of the G7 countries intend to discuss (without Russia) the problems of increasing the stability of global financial markets, tax incentives for the production of renewable energy (they want to reduce dependence not even on oil, but on the countries that produce it, including Russia) . Also on the agenda for discussion are the reform of the International Monetary Fund and issues of managing public finances in Africa to combat poverty. At the same time, the G7 countries intend to seek guarantees from African countries that their initiatives, including debt forgiveness, lead to real results.

Let us note that the topic of proper management of public finances (not necessarily in Africa) was proposed in 2006 by the Russian Ministry of Finance for consideration by colleagues. However, then the initiative of the Russian side did not find support.

Yesterday, Deputy Finance Minister Sergei Storchak expressed satisfaction that the G8 is paying more and more attention to economic issues. “Germany announced the main theme of this year’s G8 is “economic growth and the responsibility of the global economy.” For the first time since the meeting in Rambouillet in 1975, the format of the meeting will be closer to its original - it will be economics,” he told Vremya Novostey.

Within the G8, the topic of helping poor countries, including through debt relief, has been discussed more than once. Russia has assumed the corresponding obligations. As Economic Development Minister German Gref said at a recent forum in Davos, just last year Russia provided assistance to the poorest countries, writing off and restructuring their debts totaling about $2 billion. “We are one of the largest donors in the world,” -- said the minister.

Sergei Storchak also said that an agreement on restructuring Afghanistan’s debt to Russia could be signed during the spring session of the International Monetary Fund (IMF) and the World Bank (WB). As the Deputy Minister noted, Russia and Afghanistan are currently in a state of technical preparation of an agreement on the restructuring of Afghanistan's debt. "We have agreed in principle to use principal reduction schemes," Mr. Storchak said. As is known, the current Afghan authorities have long refused in principle to recognize the debt made during the reign of Babrak Karmal and Najibullah. But last year, when it became clear that recognition of the debt opens the way to write-off by all international creditors, Kabul made a difficult political decision.

But negotiations on settling North Korea's debt to Russia have been suspended. According to Mr. Storchak, “neither the Korean side nor we are yet ready for a complete rapprochement of positions.”

As for the Indian debt, the problem of which was discussed during Vladimir Putin’s recent visit to India, then, according to Mr. Storchak, “we are close to signing the so-called general letters of exchange.” We are talking about rupee debt in the amount of approximately 40 billion rupees, or almost $1 billion, which is expected to be used for the implementation of joint investment projects. In particular, for the creation of a Russian-Indian enterprise for the production of titanium dioxide and other titanium products. A project to create a multifunctional transport aircraft is also being considered (the Russian share in the corresponding joint venture will amount to $300 million at the initial stage).

Yesterday, Sergei Storchak commented on the decision of the Organization for Economic Cooperation and Development (OECD) to improve Russia’s position in the classification of countries whose companies use tied loans provided by government agencies to support exports. In this classification, Russia has been transferred from the fourth group to the third, which will allow Russian enterprises to use foreign linked loans on more favorable terms. In particular, the insurance premium rate that the lender is required to charge when providing a linked loan is automatically reduced. Countries in the fourth group have a rate of 4.6%, and countries in the third group have a rate of 3.14%. In addition to significant savings when obtaining a loan, Russia’s transfer to the third group should have a positive impact on extending the terms of investment projects implemented with borrowed funds. Today, the average loan term is five to seven years, and, according to the director of the structured financing department of Vnesheconombank, Petr Fradkov, it can become over ten years. “This will entail a qualitative change in transactions; it will be possible to implement more complex projects,” he says.

Sergei Storchak hopes that already in 2008 Russia will rise to the second group, by 2010 it will grow to the first, and then become worthy of the zero group, which currently includes all Russian partners in the G8, who do not pay a cent in insurance premiums.

Mikhail VOROBYEV, Andrey DENISOV