Russia in deal with creditors

RUSSIA REACHED agreement yesterday with the Paris Club of creditor governments to postpone repayment on $8bn worth of Soviet-era debt, easing the pressure on the nation's budget as it tries to pull out of recession.

The debt, which falls due this year and next, will now be repaid in 15 years to 20 years, officials involved in the talks said. Negotiations on the rest of the $40bn Russia owes to the 18 creditor governments in the Paris Club will begin in the third quarter of 2000.

Russia will now put pressure on commercial banks to delay payments on $32bn of debt. The country owes about $140bn to foreign banks and governments, about half of which is a legacy of the Soviet Union.

The weekend's talks came only after the International Monetary Fund approved a new $4.5bn, 17-month loan last week. Separate talks with the London Club of commercial creditors begins on Tuesday.

Restructuring is vital for the Russian government to keep its promise to pay debt accumulated after 1991 on the heels of last year's Treasury debt default. Russia has not paid any Paris Club debt since then.

One reason no one wants to cancel any Russian debt is because one of its major exports is oil. Russia's economy is currently growing at about 15 per cent a month because of rising oil prices.