5 Oct 2009 12:34

Russia may borrow $2 bln-$4 bln from World Bank in 2010 - Kudrin

ISTANBUL. Oct 5 (Interfax) - Russia may borrow $2 billion-$4 billion from the World Bank next year, Deputy Prime Minister and Finance Minister Alexei Kudrin told journalists in Istanbul.

Kudrin discussed the issue with World Bank President Robert Zoellick on Saturday.

"We are interested in a simplified, expedited loan. We agreed to hold talks on those terms," Kudrin said.

"It will be a financial loan, not an investment loan. It won't provide for any big programs or agreements," he said.

Russia may also borrow from the World Bank in 2011. "This [$2 billion-$4 billion] is our quota. The only question is when we will take it," he said.

The loan negotiations may take several months," Kudrin said.

Russia will continue to raise loans from the World Bank for specific projects, as it has done previously. "We will borrow for projects regardless, but as a rule these are small projects, $25 million, $50 million," he said.

Kudrin's deputy, Dmitry Pankin, told journalists that Russian will not take a loan if it comes with policy requirements. "If the loan is conditioned, that is, we have to agree our economic policy with them, the system of measures, then we probably won't take a financial loan," he said.

"If it's strictly a financial loan [without accompanying conditions], then we will look at the financial arguments: if it's cheaper than Eurobonds, we'll take it," Pankin said.

The current discussions are for a World Bank loan at LIBOR plus 30-50 basis points. Countries with ratings similar to Russia's are currently placing five- to seven-year bonds at LIBOR plus 250-270 basis points. "It's clear that in this case we will save money," Pankin said.

The volume of the World Bank borrowing will depend on Russia's need for money, the market situation and the loan costs. "If the situation on the market is favorable for a placement of our bonds, then we will have less desire to borrow from the World Bank. But the lower the World Bank's rate is, the more interesting it will be for us," he said.

There has been no decision on the loan maturity or how it will be spent, he said.

The loan will not require amending the budget. "Under the Budget Code we can reallocate up to $17.8 billion in instruments [the potential size of a Eurobond issue in 2010 under the draft budget]," he said.