[Russia] ...to forgive $700 million in debt

from Business Week

Russia plans this year to forgive about US$700 million (euro553 million) in debt owed by the poorest countries, Finance Minister Alexei Kudrin said Friday.

Kudrin spoke shortly before a Group of Eight finance ministers' meeting in Russia's second largest city ahead of a summit of the world's most industrialized nations next month.

Russia is chairing the G-8 this year and is keen to flex its newfound financial muscle, with billions of dollars in oil money flowing into its coffers at a time of record oil prices. It is the world's second largest oil exporter after Saudi Arabia.

Earlier this year, Russia said it planned to write off US$688 million (euro544 million) in debt owed by 16 African countries, and has offered to pay back US$22 billion (euro17.5 billion) in Soviet-era debts to the Paris Club of rich nations.

"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 Russia had reached an agreement with the World Bank to use US$250 million (euro197 million) of the US$700 million 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.

His comments came as the global charity Oxfam called on the G-8 to expand debt cancellation to more countries.

Last year, the G-8 members agreed on a a US$37 billion (euro31 billion) debt write-off. Oxfam said the deal agreed to at that summit in Gleneagles, Scotland, was having a "positive impact on people's lives," and said activists "will be looking to the G-8 in 2006 to expand debt cancellation to all the countries that need it in order to combat poverty."

The NGO called on the G-8 finance ministers and leaders to make good on their pledges to boost aid in the education and health sectors.

As they prepare the agenda for next month's summit, the finance 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 finance ministers' discussions on Friday and 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 in easing their woes.

"Energy poverty in our opinion requires particular attention. ... Energy infrastructure is the basis of any economy including those we want to support and to help become economically independent," Kudrin said.

The G-8 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 G-8 oil producers to use their surging profits to boost global production.