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. Last Updated: 07/27/2016

Japan Ends Freeze on Lending

Japan has broken the current international freeze on lending to Russia by agreeing to soon release $375 million in credits, Alexander Livshits, Russia's envoy to the Group of Seven leading industrial nations, said Wednesday.

The credit is the latest disbursement of an untied $1.5 billion loan package that has largely been frozen since last year's August crisis, Livshits said after talks with the Japanese government in Tokyo, Prime-Tass reported.

"Japan is the only country that still has an open credit line to Russia, and we value that greatly," he said.

He said Russia should receive the funds by the end of November.

Funds released by the Japanese government to Russia are normally disbursed to cofinance the World Bank's structural adjustment loans and used to shore up Russia's budget deficit, said Andrew Cunningham, senior economist with Merrill Lynch in London.

But World Bank officials in Washington said Wednesday the latest Japanese credit had no link to the World Bank program. Russia has received only $50 million from Japan under that program since lending was renewed in July this year, the World Bank said.

The Associated Press earlier quoted bank officials at the Japan Bank for International Cooperation as saying the new loan was being released to help Russia finance imports.

"This means that the budget should not necessarily benefit from disbursal," Cunningham said.

Russian media had earlier predicted that the release of funds from Japan could be a compromise solution to the current impasse on whether the International Monetary Fund disburses a second $640 million loan tranche to Russia before the end of the year.

Government officials said Wednesday that Russia is near to sending a letter to the IMF spelling out how it intends to meet the terms the fund has made conditional for the disbursal of the next loan.