Russia prepared to repay IMF loans early

For the first time in its troubled post-Soviet history, Russia is prepared to start repaying loans to the International Monetary Fund (IMF) ahead of schedule, President Vladimir Putin has said.

The pledge reflects welcome economic growth and stabilisation in Russia over the past two years after a decade of decline, just as richer nations have seen a slowdown.

‘‘We will start repaying the Central Bank loans ahead of time,’’ Mr Putin told visiting IMF managing director Horst Koehler.

He said Russia would start paying this year and next £1.8bn of a £3.3bn loan due in 2003.

The Russian Government faces several heavy debt payments in 2003 and has been concerned they would stifle growth.

Russia is one of the IMF’s biggest borrowers, with about £8.8bn in outstanding loans. The country has agreed to several sets of conditions in return for loans over the past decade, and then often faced IMF complaints that it was not following through.

The £3.3bn, five-year loan was part of what was to have been a larger package, but the rest was put on hold by Russia’s 1998 economic melt-down.

Mr Putin said Russia was in a position to start repaying the loan early because the Central Bank’s reserves continue to grow and Russia’s economy is generally in fine shape.

Mr Koehler thanked Putin for his commitment to accelerating economic reform, which he said was responsible for Russia’s growth.

The economy is expected to grow between 5.5% and 5.8% this year following record gross domestic product growth of 8.2% last year.

‘‘It is indeed fair to say that the relationship between Russian and the IMF has reached a new phase,’’ Mr Koehler said.

Mr Koehler also predicted overall growth in the world economy next year, but gave no figures. He said he and Mr Putin also discussed the global fight against terrorism, the ITAR-Tass news agency reported.

Mr Putin said incomes had grown by 5.5% in the last nine months. He said inflation was ‘‘unfortunately higher than we would like it to be’’ but lower than last year.

He said he did not want to overestimate the government’s achievements and that Russia was still interested in having a grace period for paying back the £3.3bn loan ‘‘in case the economic situation worsens’’.

High world prices for oil, a major Russian export, have played a key role in the growth and if they drop very far Russia’s economy could suffer.