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Russia to Forgive Debt Owed by Poor Nations

01.01.70

Russia said Friday that it plans to write off about $700 million in debt owed by the poorest countries a move reflecting its soaring oil-fueled wealth and a desire for equal footing with the worlds top industrialized nations.

Finance Minister Alexei Kudrin made the statement on the eve of a meeting of Group of Eight finance ministers, saying that helping impoverished nations to fight diseases and get access to energy resources should be a key priority for the worlds wealthiest countries.

The released funds could be spent on the most important development programs, Kudrin told reporters at a joint news conference with World Bank chief Paul Wolfowitz.

Kudrin also said that the G8 finance ministers will issue a separate statement Saturday on measures to combat poverty and improve energy infrastructure in developing nations.

Ensuring energy security and securing stable energy supply to the world is the key theme of Russias chairmanship, he said.

Russia, which is chairing the G8 for the first time, wants to flex financial muscles that have been buffed by billions of dollars in oil money flowing into its coffers at a time of record world prices.

It is the worlds second largest oil exporter after Saudi Arabia.

Earlier this year, Russia said it planned to write off $688 million in debt owed by 16 African countries, and has offered to pay back $22 billion in Soviet-era debts to the Paris Club of rich nations.

Kudrin said that Russia had already written off about $5 billion in Soviet-era debts to the poorest nations between 1997 and 2004.

The Russian minister also said Russia had reached an agreement with the World Bank to require debtor countries to use $250 million of the $700 million in debt it is writing off to combat infectious diseases, primarily malaria, and help improve energy infrastructure in African nations.

These projects means our relationship is moving to a new level, Kudrin said.

Wolfowitz hailed Russia as a new development partner and underlined that the new package is important as the money that will save lives.

Earlier, the international relief organization Oxfam called on the G8 to expand debt cancellation to more countries and called on the finance ministers and leaders to make good on their pledges to boost aid in the education and health sectors.

Last year, G8 members agreed on a $37 billion debt write-off.

Activists will be looking to the G8 in 2006 to expand debt cancellation to all the countries that need it in order to combat poverty, Oxfam said.

Preparing the agenda for next months summit, the ministers are also expected to discuss how the United States is dealing with its huge trade deficit and what policies other countries are pursuing to bolster domestic growth as a way of supporting U.S. exports and helping reduce that trade deficit.

Oil prices and energy policy are expected to dominate the ministers discussions Saturday. Kudrin said earlier this week that they would review the effect of higher energy costs on poorer nations, as well as the role played by the World Bank and IMF.

The G8 countries the United States, Japan, Germany, France, Britain, Italy, Canada and Russia have called for better data on oil production and reserves to help markets function more efficiently.

They also have urged G8 oil producers to use their surging profits to boost global production.

Expert opinion

Halter Marek

02.12.06

Halter Marek
Le College de France
Olivier Giscard dEstaing

02.12.06

Olivier Giscard dEstaing
COPAM, France
Mika Ohbayashi

02.12.06

Mika Ohbayashi
Institute for Sustainable Energy Poliy
Bill Pace

02.12.06

Bill Pace
World Federalist Movement - Institute for Global Policy
Peter I. Hajnal

01.12.06

Peter I. Hajnal
Toronto University, G8 Research Group