i>Wall Street Journal editorialists and other financial grouches commonly complain that the International Monetary Fund protects private lenders to dicey governments. When the IMF bails out insolvent sovereigns, the argument goes, the money just visits briefly in the treasury before flowing back to foreign bondholders. In the end, the cats stay fat, and the Western taxpayers who fund the Fund pay for the Friskies and Tuna Delite.

But this has not happened in Russia, at least not recently. Commercial creditors last month forgave $1.5 billion in debts contracted by Soviet-era foreign-trade organizations and inherited by the Russian state in 1992. The creditors agreed to swap another $2.5 billion in Soviet-era debt into eurobonds. The deal essentially wraps up Russia’s negotiations with its private “London Club” creditors. Since the talks began after Russia’s massive default in August 1998, private creditors have given up on over $12 billion owed to them.

Official “Paris Club” creditors have proven tougher. Russia’s payments to official creditors are up from $980 million in the first quarter of 2000 to $2.6 billion in the first quarter of 2001. Germany, Russia’s largest official foreign creditor, has been most vocal, insisting successfully that Russia’s very large trade surplus ($53 billion last year) gives it plenty of cash to pay its bills. More quietly, the International Monetary Fund has loaned Russia only $640 million since August 1998, while receiving close to $7 billion in repayments. Russia is current on its debts to the IMF.

So did private lenders lose their shirts in Russia? No doubt some did. But no doubt some made pots of money in 1997 and early 1998, when the Russian treasury bills (GKOs) that were later defaulted were paying returns of 50, 100, and eventually 150 percent. Last month’s settlement of Soviet-era debt clears the way for Russia’s return to private financial markets. You won’t lose your shirt if you bet that lenders will be waiting, checkbooks in hand.