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Karl Stagno-Navarra
Malta is expected to receive just a “small portion” in settlement of a pending debt of USD30 million (Lm10m) owed to the Malta Shipbuilding for the construction of three timber vessels in the early eighties.
The negotiations for settlement of the total amount – that are being conducted by the Ministry of Foreign Affairs – are reported to be difficult due to a number of factors, particularly the late delivery of the vessels that have given the Russian Federation the clout to claim its right over penalties as laid out in the original contracts signed with the former Soviet Union.
Government officials are to fly to Moscow later this month in a bid to conclude the negotiations for settlement, as the Russian government itself invited Malta to come forward with its claims for settlement.
The negotiations are reported to have commenced following Russia’s announcement last year to finally pay off Soviet-era debts to the Paris Club of creditor nations, in a dramatic display of the country’s newfound economic clout.
Ivan Falzon, chairman of government’s investments arm MIMCOL, confirmed that a delegation will fly to Moscow later this month in order to conclude the negotiations that have been ongoing for the last six months with the Russian authorities.
“We have come a very long way and we hope to conclude in the very near future,” he said.
The repayment of USD22.5bn that Russia’s Vnesheconombank made last October was the largest-ever repayment to the Paris Club of 17 creditor countries.
Analysts said that ratings agencies would upgrade Russia’s sovereign rating after the clearest sign yet of President Vladimir Putin’s determination to use the soaring value of Russian oil to clean up his country’s reputation on the financial markets.
The move knocked about a third off the country’s foreign debts, which previously stood at USD70 billion.
Russia had been due to pay off the debts by 2020, but the sharp rise in the price of oil has engineered a dramatic improvement in the country’s fortunes. That enabled it to bring the repayment forward, at an estimated saving of USD12bn.
Mr Putin said: “We used to live with our hand held out for many years ... but now the Russian economy cannot only repay debts but do so ahead of time.”
A spokesman for Moscow’s Finance Ministry said that the repayment would reduce Russia’s foreign debts as a share of GDP to just 9%. “The early repayment to creditor nations was made possible by growth in the economic and financial might of Russia,” it said. “Repaying the entire sum… will facilitate a strengthening of Russia’s international authority as a state with significant financial reserves and stable borrowing.”
ksnavarra@mediatoday.com.mt
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