Russia to prepay EUR 164 million of its debt to Finland

The Paris Club agreed today that Russia will prepay nearly EUR 12 billion of its debt to creditor countries. Finland’s share of Russia’s rescheduled debts totals EUR 431 million, and Finland’s share of the prepayment is EUR 164 million. The prepayment offer is the largest ever made in the history of the Paris Club.

The Russian Federation’s debt to Paris Club creditors totals EUR 31 billion. The biggest creditors are Germany (46% of the total debt), Italy (13%), France (8%), Austria (7%), the USA and Japan (both 5%). The debt to Finland is EUR 431 million.

The payment to be received by each creditor country is determined in proportion to Russia’s debt to the country in question. This means that Finland’s share of the prepayment is EUR 164 million, provided that all creditor countries use their right to receive payment.

Participation in the prepayment programme is voluntary: creditor countries can decide whether they accept Russia’s offer. If not all creditor countries use their right, Finland’s share may still rise a little.

The prepayment will take place in June, July or August 2005. Creditor countries must decide on their participation in the prepayment arrangement by 1 June. Finnvera’s Board of Directors will make the decision before the beginning of June.

Finland’s share of Russia’s debt is paid to the State Guarantee Fund. The Fund bears the ultimate responsibility for any major claims paid on the basis of commitments made by Finnvera and – before 1999 – by its predecessors, the Export Guarantee Board and the State Guarantee Board.

According to the original rescheduling plan, Russia was to pay its debt by 2020. Russia made its prepayment offer six years after the previous rescheduling agreement made at the Paris Club in 1999.

According to the agreement, Russia will pay its debt at par.

The Paris Club is an informal group of public creditors. It meets to discuss problems faced by debtor countries in meeting their payments and, whenever necessary, makes agreements on the restructuring of debts. Finnvera represents Finland at Paris Club meetings together with the Finnish Ministry of Finance.

For further information:
Markku Mäkinen, President and CEO, tel. +358 20 460 7231
Marja Karimeri, Senior Vice President, Legal Affairs, tel. +358 20 460 7200
Aulikki Sundström, Head of Claims and Recoveries, tel. +358 20 460 7265