He said the process of debt verification within the second stage of swapping the USSR’s commercial debt for Eurobonds, had been stepped up. According to Vneshekonombank, $400m of the debt has been verified, and another $50m to $70m remains.

Mr. Kolotukhin added that Russia’s EUR 175m debt to the International Bank for Economic Cooperation was also expected to be settled in 2004.

In December 2002, Russia swapped part of the USSR’s commercial debt ($1.28bn) for Eurobonds.

Mr. Kolotukhin said Russia’s total public debt would drop to 26.5 percent of the GDP by the end of 2004 (at the beginning of the year, the debt was more than 31 percent of the GDP). According to him, the country’s public debt in 1998 was 145.6 percent of the GDP.

The Finance Ministry official said a public debt of 26.5 percent of the GDP was a “very moderate figure compared with some industrially developed countries”. So, Germany’s public debt is more than 30 percent of the GDP. At the same time, Mr. Kolotukhin stressed that there was a significant difference between Russia and industrially developed nations. In particular, the Russian economy depends on exports. As the Russian economy is more vulnerable to risks, the public debt should be significantly lower than in industrially developed countries, according to Mr. Kolotukhin. At the same time, he said the Finance Ministry was not going to abandon foreign borrowing in favor of domestic borrowings.

According to Mr. Kolotukhin, the Finance Ministry does not expect the rating agencies Standard and Poor’s and Fitch to grant Russia an investment grade rating before the end of the year.