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. Last Updated: 07/27/2016

State Seeks Quick Deal With London Club

Russia will aim for a quick framework deal to restructure $32 billion in Soviet-era debt with the London Club of commercial creditors next week, the chairman of state-controlled Vneshekonombank said Friday.

"We don't have time for tactical, diplomatic talks. Both sides have to put their cards on the table," Andrei Kostin said.

"We are going to Frankfurt with a serious attitude that if responded [to] adequately, will allow us at this round of talks to work out a framework that would be very close to a final agreement," he said.

Finance Minister Mikhail Kasyanov will head the Russian team in the sixth round of London Club talks Nov. 16.

Russia wants to reduce considerably its principal debt, extend a grace period and lower interest-rate payments as part of its overall strategy for restructuring a massive burden of foreign debt.

London Club creditors link a debt reduction to the government issuing sovereign paper instead of bonds known as PRINs and IANs, which are owed by Vneshekonombank.

A senior Finance Ministry official said Russia would be ready to swap for sovereign Eurobonds if it considered the resulting debt burden sustainable.

Kostin agreed, but said the new issue should not increase the burden of Russia's foreign debt, which is unbearable for the country's small budget.

He said the 2000 budget targeted $10.2 billion in foreign debt repayments, half of which would be paid from domestic sources and half of which would have to be refinanced abroad.

"Russia would be prepared to consider the issue of Eurobonds instead of existing London Club securities subject to substantial debt service reduction," Kostin said, declining to comment on the volumes of reduction and new issue.

Meanwhile, weary Russian and International Monetary Fund negotiators worked into the night Friday as Russia tried to convince an IMF mission it deserves renewed support expected by the government since September.

First Deputy Prime Minister Viktor Khristenko said the Fund wanted more details of 1999 budget fulfillment and might have to continue work, expected to end Friday, into next week.

The IMF mission has kept silent on its conclusions and whether it will recommend the Fund board of directors disburse a $640-million loan tranche.

In a positive development for Russia, a World Bank spokeswoman said Friday the bank will probably release this year $100 million of $1.7 billion in restructured untied loans.