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. Last Updated: 07/27/2016

Debt Forgiveness 'Not in Our Interests'

A senior Russian debt expert said Friday that Moscow would not ask for forgiveness on its large foreign debt but he conceded it would try to string repayments out for as long as possible.


"The second we ask for debt forgiveness, the doors of the world's banks will close to us," Sergei Storchak, deputy head of the finance ministry's external debt and foreign credits department, said in an interview.


"We will not press for debt forgiveness," he said. "This is obviously not in Russia's interests. We've been trying to become part of the world economic system for the last two years and asking for debt forgiveness would be counter-productive." Russia, which took on responsibility for the debts of the former Soviet Union when the superpower fell apart, owed foreign creditors a total of $113 billion at the start of the year, which includes arrears and new Russian debts.


Without taking account of rescheduling deals, which give Moscow more time to pay, Russia would have to give creditors $15.5 billion next year, equivalent to 40 percent of the state's total budgeted income. Russia has already won a series of rescheduling deals with the Paris Club of creditor states. It also signed a framework deal with the London Club of creditor banks in October, but Storchak said it would take some time to complete this deal.


"There are $30 billion of debts and 600 banks. Do you know how many separate credit agreements there are? A huge amount of work remains to be done," he said.


Western debt markets went into a spin in August after current Foreign Trade minister Oleg Davydov -- Moscow's chief debt negotiator -- suggested some of the debt be written off. He has since distanced himself from this stance. "We must look at this not so much in the interests of the budget as from the point of view of Russia's entrepreneurs and financial structures," Storchak said.


"If we did this, our Russian businessmen would find themselves stewing in their own juice for the next few years."