Debt-Rescheduling Talks Set

PARIS -- Western governments agreed to talks with Moscow aimed at a "comprehensive rescheduling" of Russia's giant debts inherited from the former Soviet Union.


The Paris Club of official creditors said Saturday, after three days of talks in the French capital with Russia's chief debt negotiator Oleg Davydov, that they also agreed to recommend a delay on debt repayments falling due in 1995.


Russia has long pushed creditors for a long-term deal, rather than a year-by-year approach, to help it cope with the mountain of debts run up by the Kremlin's rulers before the collapse of communism.


Creditors and Russia "undertook to negotiate with a view to agreeing on a comprehensive rescheduling of the debts owed to creditor countries contracted or guaranteed on behalf of the government of the former Soviet Union for which the government of Russia has agreed to be responsible," a statement said.


"It is intended that, provided certain conditions are met, negotiation of such an agreement will begin in the fall of this year," it said, adding that Russia had requested the deal. It did not spell out the strings attached.


Davydov, deputy prime minister and foreign trade minister told Interfax that in accordance with the 1995 budget, Russia will repay $1.1 billion in interest to the Paris Club by the end of the year, staying within the limits of the parliament-approved allocations to the servicing of the state foreign debt, amounting to $6.4 billion.


Davydov said the question of debt restructuring "will be discussed in detail" at the upcoming G-7 summit in Halifax, Canada.


The representatives of the creditor countries also "agreed to recommend to their respective governments a major reorganization of the external obligations of the Russian Federation falling due in 1995 resulting from loans and guaranteed credits extended by the creditor countries."


Russian officials said they have budgeted to spend around $6 billion in debt servicing this year on total debts of $130 billion. Creditors say just over half the total is owed to Paris Club members. Russia owes Club members about $9.5 billion for 1995.


Last June the Paris Club agreed in principle to reschedule a total of about $7 billion of Russia's 1994 debts -- delaying repayment for up to 15 years. A year earlier it had rescheduled $15 billion due in 1992 and 1993.


Davydov said, before leaving Moscow, he doubted the club would agree to a request for a long-term rescheduling of former Soviet debt.


Russia, itself owed big debts by Third World countries which borrowed heavily from the old Soviet Union, has also asked to join the Paris Club as a creditor.


The Paris Club said that members "noted with satisfaction [Russia's] adoption of an economic and financial program supported by a standby arrangement approved by the executive board of the IMF on April 11, 1995."