Russia set to repay debts early, cut taxes

Moscow, Jan 31 | Updated: Feb 1 2006, 05:30am hrs
President Vladimir Putin said on Tuesday Russia is ready to repay more of its foreign debts early and cut taxes, as strong economic growth boosts fills state coffers with cash.

Speaking at his annual news conference, Putin gave an upbeat assessment of Russias prospects, highlighting economic growth of 6.4 p% in 2005.

He said Russias strong finances meant it could buy back more of its foreign debts after repaying $18 billion to the Paris Club of sovereign lenders and the International Monetary Fund last year.

We have significantly cut our debts and we are committed to keep redeeming debt ahead of schedule, Putin said.

Finance officials have said they want to repay another $12 billion to the Paris Club, and Putins backing lent support to the euro currency against the dollar on international exchanges.

Putin said the state debt had fallen as a percentage of gross domestic product to 30% from 80% in 2000. The Kremlin leader held out the prospect of further cuts in Russias already-low taxes, but said his top priority would be first to get inflation which ended 2005 at 10.9% down into single digits. We need to reduce taxes, Putin told journalists. But the question is when, how and which taxes and at what rate. Any decision in reducing taxes will have an impact on the fight against inflation... We need to reduce inflation to single digits.