Investment in Russia and Eastern Europe Message Board

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Strategies & Market Trends : Investment in Russia and Eastern Europe

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To: Real Man who wrote (823)	11/21/1998 8:38:00 PM
From: Real Man	Read Replies (1) of 1301

On the debt restructuring... MOSCOW, Nov 20 (AFP) - Russia is to appeal next week to the Paris and London Clubs of creditors to restructure its massive foreign debt, Finance Minister Mikhail Zadornov said Friday according to the Interfax news agency. Zadornov said that the government would finalise its strategy next week and take it to creditors and would "deal with the restructuring of state external debt." Russia's foreign debt totals 170 billion dollars according to latest analyst calculations, including almost 40 billion dollars to the Paris Club (countries), some 26 billion to the London Club (commercial), and almost 16 billion dollars in eurobond issues. Moscow also owes around 23 billion dollars to the International Monetary Fund (IMF), World Bank and other multilateral creditors, and officials said Friday that the government had already asked IMF officials to consider restructuring some five billion dollars which fall due for repayment in 1999. Ruined by the financial crisis, Russia needs to reschedule a total of 17 billion dollars falling due next year as it faces a deepening budget hole which could only be filled otherwise by inflationary money printing. It also needs to seal a final accord on how to restructure some 250 billion rubles of domestic debt which Moscow froze in August at the same time as devaluing the ruble. The government and lead negotiator Deutsche Bank trumpeted an "agreement in principle" on Friday between Moscow and western banks that were caught cold by the August 17 default. But while Deutsche Bank said that further talks in London would be required to thrash out the devilish detail of the restructuring deal, Zadornov was quoted as saying that the matter was now closed. He said that the government and Central Bank would now decide the thorny question of when and at what exchange rates foreigners can repatriate the cash they receive from the restructuring. Officials have said that the deal on the table involved 10 percent of the original holding value being paid off in cash, 20 percent being transferred into securities which can be used for investment or tax-offsetting purposes, and 70 percent into new long-term bonds.

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