ABU DHABI, September 10 (RIA Novosti) - Russia will pay off its $580-million Soviet-era debt to the United Arab Emirates including $110 million in interest by the end of next month, a deputy Russian finance minister said Monday.
"In late September or October we will pay off the debt. The main debt will be repaid from the Stabilization Fund, as provided for by law, and interest will be paid from budget allocations," Sergei Storchak said.
Storchak said an agreement to this effect was signed Monday on the sidelines of President Vladimir Putin's visit to Abu Dhabi. The Arab country had requested that Russia redeem the debt through a one-off payment, in view of Moscow's full repayment of its debt to the Paris Club of creditors and Russia's improved financial situation.
Russia repaid the remaining $21.3 billion of state debt to the Paris Club ahead of schedule in 2006, using the Stabilization Fund, set up to accrue windfall oil revenues as a safeguard against financial upsets similar to the acute 1998 crisis.
According to the Finance Ministry, the fund had reached 3.4 trillion rubles ($133 billon) as of September 1.
Storchak said the Soviet Union borrowed $500 million from the UAE to finance the development of Pantsyr short-range air defense systems in 1991 and began repaying the debt in 1994 by machinery supplies.
The official said the new agreement was beneficial for Russia, as the creditor wrote off part of the penalty interest. He also said Russia had supplied the Emirates with a total of $800 million in goods as debt repayment.
