Russia and the Paris Club of creditor nations signed on Friday a protocol on Russia's early payment of debt of more than 22 billion U.S. dollars, the Itar-Tass news agency reported.

"We will pay back Russia's debt to the Paris Club by the end of August," RIA-Novosti news agency quoted Russian deputy Finance Minister Sergei Storchak as saying. Storchak signed the agreement on behalf of the Russian government.

The protocol envisages the early reimbursement of the former Soviet Union's remaining 21.3-billion-dollar debt to the Paris Club of creditors, as well as the payment of a one billion dollar premium to compensate the creditors for their interest loss.

However, Russia could save a total of 7.7 billion dollars in interest by early debt reimbursement, Storchak said.

Storchak said a part of the debt would be paid at a nominal value and a part bought out at market price.

"Before the end of the summer, Russia will no longer be a client of the Paris Club," Russian Finance Minister Alexei Kudrin told the upper house of parliament on June 22.

The debt will be paid from the Russian government's Stabilization Fund, the size of which was about 1.93 trillion rubles (71.44 billion dollars) on June 1, 2006. The debt will be paid by Aug. 21, 2006, by remittances to each Paris Club member.

Germany, which holds the biggest share of Russia's debt, is to receive a premium of 700 million dollars, with Britain, France and the Netherlands sharing the rest.

Source: Xinhua