Russia yesterday reached a deal with its western commercial creditors on rescheduling $33 billion of defaulted loans and interest inherited from the former USSR. The deal gives Russia seven years before it has to start repaying the principal and 25 years in which to pay off the debt, which consists of $24 billion in defaulted loans and around $9 billion in outstanding interest.
First Deputy Prime Minister Anatoly Chubais hailed the agreement, saying it will open up "vast opportunities" for foreign investors who will now feel more secure about doing business in Russia. He said the deal would restore Russia’s reputation, "which is no less valuable than its gold reserves." The agreement is expected to enable Russia to acquire a higher credit rating, which Chubais had said the country would be asking for after it joined the Paris Club of creditor-nations last month. This will make borrowing abroad cheaper and easier. Chubais promised that "hundreds and thousands" of Russian enterprises will soon get free access to Western financial markets without having to ask the government for permission. (Itar-Tass, October 6; Financial Times, October 6, 7)
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