Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Russia Missed $1.5Bln In Soviet Debt Payments

Russia has missed $1.5 billion in payments on its Soviet-era debt since August and is holding talks with Western creditors over this year's payments, Deputy Finance Minister Mikhail Kasyanov said Friday.

He also reaffirmed Russia's commitment to meet payments on loans extended after 1992, but warned that it would be impossible to service all of its debts.

"This is a year when Russia will simply try to survive," Kasyanov said.

The state estimates that it needs a primary budget surplus of 6 percent of gross domestic product over the next five to seven years to pay all of its debts.

"That's unrealistic and our creditors understand that," Kasyanov said.

Russia is hoping to hammer out a debt-restructuring deal with Western creditors, and observers say it is likely that Moscow will follow the lead of some debt-laden Latin American countries and ask that some of its obligations be written off.

Kasyanov said Russia has not made such a request, but added that the creditors were fully aware of the nation's dire financial situation.

So far Russia has not missed a single payment of any loans made after Jan. 1, 1992.

Moscow did miss a payment of $362 million on Soviet-era debt to the London Club of creditors in December. Russia won a reprieve, though, when the club's 600 members decided not to put the country in default. However, Russia did not muster enough support to restructure the debt into 15-year paper.

Some $17.5 billion of debt matures this year, but the budget draft earmarks only $9.5 billion for service of the debt. Debts made after 1992 account for $8.1 billion of payments. The remaining $1.4 billion will be funneled to pay interest on Soviet-era debt.

Western investors will be allowed to use proceeds from restructured state bonds to buy shares in Russian companies, Kasyanov said.

Under the deal, investors can purchase shares on the secondary market, but will not have access to any government-owned stakes, he said.