Russia Skips Payment On
$1.3 Billion Soviet-Era
Debt Instrument
MOSCOW, May 14 (AFP) - Russia skipped a 1.3 billion dollar (1.2 billion euro) payment on its Soviet-era debt Friday, transferring only interest payments on a raft of obligations to its debt agent.
The finance ministry said it had paid 333.63 million dollars to Vnesheconombank to cover interest payments on five debt instruments covering a mixture of Soviet-era and Russian liabilities.
However, the ministry failed to make a 1.346 billion dollar payment on principal for MinFin-3, although Vnesheconombank will make a coupon (interest) payment on the obligation.
With 1.6 billion dollars of liabilities maturing, May is a peak month for debt repayments. A further 2.5 billion dollars are due in June.
Conceding it had no hopes of making Friday's payment deadline, the finance ministry last week asked creditors for a six-month grace period in which to reschedule the terms of payment, but negotiations have not yet begun.
MinFins are dollar-denominated domestic debt which were issued in 1993 to compensate Russian entities whose hard-currency accounts in state bank Vnesheconombank were frozen when Moscow defaulted on Soviet debt in 1991.
While technically domestic debt, the dollar-denominated MinFins are considered part of Russia's external debt, a 141 billion dollar mountain Moscow openly admits it cannot hope to pay without renegotiating the terms.
The dismissal of the Russian government Wednesday by President Boris Yeltsin has put on ice Moscow's attempts to unravel its Gordian knot of debt, 17.5 billion dollars of which comes due this year.
Moscow has only budgeted repayments of 9.5 billion dollars in the 1999 budget and is struggling to thrash out a rescheduling deal with its long-suffering creditors.
They include the International Monetary Fund, which is due 4.6 billion dollars this year and has lent Russia some 20 billion dollars since the collapse of the Soviet Union.
The renewed government crisis and political uncertainty surrounding attempts by parliament to impeach President Boris Yeltsin has scuppered a raft of IMF-backed legislation the Fund has demanded in return for credits of 4.5 billion dollars over 18 months.
The political turmoil has had a knock-on effect on other financial aid to Russia, notably from the World Bank and Japan.
Faced with generalised default on its liabilities, Moscow has vowed to make payments on Russian liabilities while running up arrears on Soviet-era debt in the hope of nailing down a rescheduling agreement.
The strategy forms a key plank of its talks with the Paris and London Clubs of sovereign and commercial creditors, with whom the authorities are locked in difficult negotiations.