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At the beginning of 2005, the foreign debt of the Russian Federation was $115 billion, Finance Minister Alexey Kudrin informed President Vladimir Putin. The average level of the rate of debt servicing varies from 7% to 13%. The cost of servicing the debt is three to four times higher than equivalent expenses in other countries of the G-8, and requires up to $7 billion yearly.

According to Finance Ministry estimates, paying off each $10 billion of debt saves interest of $700 million to $1.3 billion every year.

The President stressed that it would be economically expedient to pay off foreign debt as soon as possible. At the same time, the President’s position is that the Government is capable of both solving social issues and reducing debt.