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. Last Updated: 07/27/2016

Budapest Sees Debt Deal Boosting Economic Ties

APHungarian Prime Minister Peter Medgyessy and President Vladimir Putin discussing debt and trade issues in the Kremlin on Friday.
BUDAPEST, Hungary -- Russia will pay $90 million to Hungary in cash within a month in repayment for its outstanding Soviet-era debt under an accord just reached by the two sides, Hungarian Prime Minister Peter Medgyessy said Saturday.

This means that Russia agreed to settle its outstanding $245 million debt at a rate of 36 percent, which includes interest, Medgyessy told journalists at Budapest airport on his arrival home from an official visit to Moscow.

"A fair and good agreement has been signed that settles the debt issue between the two states without mediators," he said, adding that there was no decision yet how Hungary will spend the much-awaited repayment.

During his visit, Medgyessy met President Vladimir Putin and Prime Minister Mikhail Kasyanov.

Russia's debt to Hungary totaled some $1.7 billion after the collapse of the Soviet Union, but this has been gradually paid off over the past decade, mostly via commercial deals.

Medgyessy's visit to Moscow was the first by a Hungarian prime minister in seven years.

It is seen as a milestone in the efforts of Hungary's new center-left government, elected in April, to improve political and economic ties with Russia, once Hungary's main export market.

Putin expressed hope Friday that Medgyessy's visit would reverse the two countries' declining trade turnover.

Putin said that bilateral trade had slid by 6.6 percent in 2001 and 7 percent this year."I am certain that your visit will serve as a good impetus in developing our relations in all spheres," Putin said.

"In recent years, we have neglected one another, and I would like to open a new page and give prospects to our cooperation," Medgyessy said.