Russia made a pitch to the Group of Eight on Saturday to repay billions of dollars of debt, but failed to convince rich nations to use the cash to fund a major write-off of loans to the world's poorest countries.
President Vladimir Putin told G8 finance ministers that Russia was prepared to buy back up to $11.9 billion (€9.98 billion) in Soviet-era debts it owes to the Paris Club of sovereign lenders. He said some of Russia's G8 partners could use that money to recapitalise an arm of the World Bank in charge of a $38 billion multilateral debt relief initiative agreed at last year's summit in Gleneagles.
But the ministers - also from the United States, Japan, Germany, Britain, France, Italy and Canada - failed to agree on the proposal at the talks in Moscow, although in a communique they welcomed Russia's drive to repay its foreign debts early.
Addressing the G8 ministers in the Kremlin, Putin drove home his argument by highlighting his concern over the state of the world economy.
"Despite the good indicators for economic growth in 2006, there are a series of causes for concern. The world financial and economic architecture is showing early signs of instability," he said.
Booming oil prices are filling the coffers of Russia, the world's number two oil exporter, even as they pressure the finances of oil consuming nations.
"It is clear that some creditor countries are experiencing a shortage of funds and they could use the money made available from Russia paying off its debt towards contributions to international organisations," Putin said.
The G8 has not yet found a way to recapitalise the World Bank's International Development Association (IDA), which needs a cash injection to absorb the hit from the debt write-off.
But ministers baulked at linking that issue to a possible Russian buyback, whose proceeds could be used to plug creditors' budget surpluses. Putin said that Russia was prepared to pay $587 million to help cover a structural financing deficit at the IDA.
But Russian Finance Minister Alexei Kudrin said the G8 still needed to redouble its efforts to implement the debt relief initiative, which is targeted at African countries.
World Bank President Paul Wolfowitz, who is pushing to raise the cash needed to finance the 40-year debt forgiveness programme, also supported Russia's willingness to contribute.
- (Reuters)
