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Russia to pay $20.8 of Paris Club debt early - finance minister

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MOSCOW, June 19 (RIA Novosti) - Russia intends to pay off $20.8 billion of its debt to the Paris Club of creditor nations ahead of schedule, with a premium of $1 billion, the finance minister said Monday.

"At present no final decision has been taken on pre-term payment of Russia's debt to the Paris Club, [but] the conditions for paying off the debt will be studied at a session of the government in the near future," Alexei Kudrin.

He said the former USSR's debt to the Paris Club, which currently stands at $22 billion, would total $20.8 billion after a payment in mid-August.

Kudrin said Russia had held consultations with Paris Club members on the terms of the pre-schedule payment last week, and that Russia would repay its debt at a nominal value to those Paris Club members to which it pays interest at a floating rate.

"Countries with a fixed interest rate of 7-8% do not want to part with this debt, and are demanding compensation," he added.

Russia will save $7.7 bln by making the early repayment, which Kudrin said was the "most effective investment of the resources of the Stabilization Fund."

The Stabilization Fund was set up in 2004 to harvest windfall petrodollars over a cutoff point of $27 per barrel of crude. It stood at 1.93 trillion rubles (about $71.4 billion) as of May 24.

A report in leading business daily Vedomosti Monday cited an anonymous government source as suggesting Prime Minister Mikhail Fradkov had vetoed the pre-term repayment because Russia's creditors were demanding a premium for accepting early payment.

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