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. Last Updated: 07/27/2016

Russia Cancels $4.8Bln in Soviet-Era Ethiopian Debt

ADDIS ABABA, Ethiopia — Ethiopia said Wednesday that Russia had canceled $4.8 billion of debt run up by its former Marxist dictator Mengistu Haile Mariam, once one of the former Soviet Union's staunchest allies in Africa.

The head of Ethiopia's loan and investment department, Teklu Teferra, told the state-owned Ethiopian News agency that Russia had so far canceled 80 percent of debts.

The remaining 20 percent of the loan has been included in the debt reduction and rescheduling program of the Paris Club of creditor nations, of which Russia is a member, Teklu said.

Russia made the debt reduction following a series of negotiations with the Ethiopian government, he added.

Mengistu, ousted by the present government 10 years ago this week, borrowed vast sums to spend on arms purchases to suppress rebellions in northern Ethiopia.

The present rulers drove Mengistu into exile in 1991 in an uprising that ushered in an era of free market reforms.

Ethiopia owes external creditors $5.5 billion in debt, of which $2.9 billion was obtained from World Bank, the International Monetary Fund and other international credit institutions, Teklu said.

Much of Ethiopia's foreign debt is expected to be written off this year under the Heavily Indebted Poor Countries initiative designed by the World Bank and IMF.