BUSINESS

Deputy Finance Minister Pankin: Government May Sell Less Debt

Bloomberg

MOSCOW — The government may sell “considerably” less debt than the $18 billion that it previously announced, given the current price of oil, Deputy Finance Minister Dmitry Pankin said Tuesday.

The final figure will “depend on the amount of revenue and the situation with the world economy next year,” Pankin said. “The draft budget for next year includes a limit on foreign borrowing, which is $18 billion. That doesn’t mean we will look to borrow $18 billion.”

The government is planning its first international debt sale since the 1998 default to help plug the country’s first budget gap in a decade. The deficit will reach between 7.5 percent and 7.7 percent this year, Finance Minister Alexei Kudrin said Oct. 21. The government plans to narrow next year’s shortfall to 6.8 percent.

Prices for crude oil have risen 78 percent this year.

Pankin said the government aimed to complete “technical” preparations for the debt sale by March though it had not yet chosen managers for the sale.

The amount of cash that the government needs to raise may be as low as $8 billion to $9 billion, compared with the government’s estimate for about $18 billion, according to Luis Costa, an emerging markets debt strategist at Commerzbank in London.

“They’ve announced the program long before the rally in oil, and I think the $18 billion number we have doesn’t take into account the very benign levels of oil prices for Russia,” Costa said.

Russia will start a roadshow in London on Thursday to attract investors. The country’s 2009 debt is equivalent to 10.5 percent of gross domestic product, well below debt ratios in Germany and Britain.

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