Bloomberg News

Russia in Talks to Buy Spanish State Debt, Kremlin Aide Says

October 10, 2011

(Updates with Dvorkovich comment in third paragraph.)

Oct. 10 (Bloomberg) -- Russia’s government, holder of the world’s third-largest reserves, discussed buying Spanish sovereign debt at a meeting with Finance Minister Elena Salgado, said Arkady Dvorkovich, the Kremlin’s top economic adviser.

Salgado met Foreign Minister Sergei Lavrov and Alexei Kudrin, a former finance minister, and their talks included the question of possible purchases of bonds issued by the euro- area’s fourth-biggest economy, Dvorkovich said today at a conference in Moscow.

“We are waiting for a European declaration of a concrete, clear strategy to exit the crisis,” Dvorkovich said. “If this strategy will require help from Russia and other BRICS countries, we are ready to extend support.”

Finance ministry and central bank officials from Brazil, Russia, India, China and South Africa met last month before the International Monetary Fund’s annual meeting to discuss coordinating policy as Europe reels from a sovereign debt crisis. French President Nicolas Sarkozy, speaking yesterday at a joint briefing with German Chancellor Angela Merkel, said European leaders will deliver a plan on recapitalizing banks by the Nov. 3 Group of 20 summit.

Merkel said a report from a team of inspectors from the IMF, the European Union and the European Central Bank later this month will help determine the next step to keep Greece in the 17-nation euro zone.

Acting as a Bloc

The world’s largest emerging economies will not act as a bloc to ease Europe’s crisis, Russian Deputy Finance Minister Sergei Storchak said Sept. 22. Even so, Russia is “theoretically” prepared to buy common euro-area bonds, Storchak said in a Sept. 13 interview.

It would be “premature” to say that Russia is already prepared to make European bond purchases, Dvorkovich said today.

Russia’s National Wellbeing Fund, one of two funds the state uses to safeguard windfall oil revenue, was permitted to buy Spanish government bonds with maturities of between three months and one year starting March 21, according to the Finance Ministry. Russia had removed Spain and Ireland sovereign debt from its investment list on Nov. 3 as the two euro-member countries struggled to contain record deficits.

The funds are managed by the central bank under guidelines set down by the Finance Ministry. They can also invest in state debt of Austria, Belgium, Britain, Germany, Canada, Denmark, Luxembourg, Netherlands, U.S., Finland, France and Sweden, according to the ministry.

--With assistance from Paul Abelsky in Moscow. Editors: Paul Abelsky, Brad Cook

To contact the reporter on this story: Alena Chechel in Moscow at achechel@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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