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. Last Updated: 07/27/2016

Minister Calls for Relief From Soviet-Era Debts




The government wants its foreign creditors to revamp the entire 20-year payment schedule of the country's Soviet-era debts instead of just making year-by-year adjustments, Finance Minister Mikhail Kasyanov said Tuesday.


Russia has been unable to meet several foreign debt payments recently and has been asking the London and Paris clubs of creditors to reschedule Soviet debt payments falling due this year and next.


However, Kasyanov said at a news conference that the negotiations should take a broader approach, and the entire 20-year debt schedule needs to be reworked. Kasyanov is to lead talks with the London Club that begin Aug. 3.


"The topic of the [London Club] agenda shouldn't include the payments for 1998, 1999 and 2000, but all outstanding payments ... to lower the debt burden, allow Russia to undertake more ambitious reforms, stabilize economic growth and contribute to the well-being of the population," Kasyanov said.


Russia's total foreign debt is about $150 billion. Of that figure, about $100 billion dates to the Soviet era, and about $50 billion has been run up since the Soviet collapse eight years ago.


Russia is facing annual foreign-debt payments of roughly $15 billion a year for the next decade - a sum the nation simply can't afford.


Moscow has been dropping hints lately that it will want a major overhaul of its Soviet debts.


In an interview published Friday, Russia's envoy to international financial organizations, Mikhail Zadornov, said the country will see no economic growth in the next decade unless its foreign debts are rescheduled.


Moscow defaulted on its London Club debt in December when it missed a $362 million interest payment. It missed two more debt payments totaling $578 million in June.


Talks with the Paris Club are expected to begin Thursday, a day after the International Monetary Fund's board of directors is scheduled to decide on disbursing funds from a new $4.45 billion loan program.


An IMF agreement is a precondition for beginning formal talks with the London and Paris clubs.


Kasyanov said Moscow hopes to get the first, $630 million installment of the IMF loan before the end of the month. The loan is expected to trigger additional lending from the World Bank and Japan.


Russia's economy has been in recession for most of the decade, and foreign lending was frozen after the economy nose-dived last August.


Prime Minister Sergei Stepashin is currently in the United States trying to drum up support for new loans and investment in Russia.