BERLIN - Russia is to repay about five billion euros (6.3 billion dollars) in debt to Germany as part of a deal to speed up debt payments to the Paris Club and the International Monetary Fund, the German Finance Ministry said Friday.
Russia reached agreement with the Paris Club of creditor nations on Friday over the repayment of 15 billion dollars in debt from total debt amounting to around 40 billion euros at the end of March.
That outcome "means that a sum of around five billion euros will be repaid to Germany", the biggest lender to Russia, finance ministry spokesman Stefan Giffeler said.
And the money would go some way to filling some of the big holes in Germany's public purse at present, he said.
The payment "is an important pillar in our fiscal strategy of using one-off measures to balance some of the risks in the 2005 budget", the spokesman said.
On Thursday, Finance Minister Hans Eichel had revealed that tax revenues this year would fall around 5.1 billion euros short of target as a result of slow growth and high unemployment.
As a result of that and even bigger shortfalls in coming years, Germany was finding it "more and more difficult" to bring its public deficit back within EU limits as required under the Stability and Growth Pact, Eichel complained.
The minister had said he intended to use "a number of exceptional measures this year" to try and resolve the problem.
Speaking in Luxembourg on Friday, Eichel's number two, state secretary Caio Koch-Weser. also said that the Russian debt payment would "help our budget situation."
Under the terms of the stability pact, eurozone countries are not allowed to run up public deficits in excess of 3.0 percent of gross domestic product (GDP). But Germany, the main architect of the pact, has been in breach of the 3.0-percent rule for the past three years and observers expect it to remain so again this year.
In December, Russian President Vladimir Putin had said his country would this year pay part of its estimated 21-billion-euro debt to Germany, taking advantage of high inflows of foreign currency resulting from the runaway price of oil.
05/13/2005 13:08 GMT