MOSCOW (AP) - Russia may have to spend an extra dlrs 400 million this year to pay off its debts to European countries because of the dollar's slide against the euro, the Russian finance minister said Tuesday.
Russia's hard currency reserves are held in U.S. dollars, but the bulk of its huge foreign debt is owed to European creditors and is now denominated in euros.
"We will probably have to disburse dlrs 350 to 400 million dollars more in foreign debt payments ... if the exchange rate stabilizes at one euro equal to one dollar," Deputy Prime Minister Alexei Kudrin, who is also finance minister, told reporters.
The value of the dollar dropped below the euro for the first time in 2 1/2 years on Monday, reflecting renewed anxiety about America's economy and the stock market.
The dollar's slide prompted concern among ordinary Russians. While the European Union is Russia's largest trading partner, the U.S. dollar remains the de facto second currency in Russia. Many people keep savings in dollars and stores set prices in dollars instead of rubles, which consumers lost confidence in after a series of currency crashes in the 1990s.
"The main thing now is not to make sharp movements," Alexei Volin, deputy head of the Russian government administration, told Interfax news agency.
Kudrin, who said he keeps his personal savings in rubles, also dismissed suggestions that Russia rethink its policy on keeping reserves in dollars. He said Russia's special reserve for foreign debt payments is sufficient to withstand the increased burden this year.
Russia was scheduled to make a total of dlrs 14.2 billion in foreign debt payments for 2002, and dlrs 17 billion next year.
High prices for oil - Russia's top export - in 2000 and 2001 drove long-awaited economic growth and even helped the government pay off more debt than had been scheduled. But economists question whether the recovery has been strong enough to cover next year's heavy debt load, regardless of the dollar-euro exchange rate.