As of October 1, 1998, the Russian government owed foreign creditors $142 billion. International financial institutions, or IFIs (the International Monetary Fund, the World Bank and the like), account for $22 billion, and foreign governments and government agencies are owed $67 billion. Debts to private banks and corporations make up the remaining $53 billion. Debt service in 1999 is about $17.5 billion, of which Finance Minister Mikhail Zadornov says only $9.5 billion can be paid, and that only if the IFIs and foreign governments come across with $5.2 billion in new untied lending. Beyond that, Zadornov says Russia would like to borrow another $2 billion abroad.

What’s it like to be a creditor of Russia? Just before he was forced to resign at the beginning of February, the country’s top prosecutor, Yuri Skuratov, revealed in a letter to the Duma that in 1992-1997 the Central Bank had passed $50 billion in reserves through an offshore institution, the Russian-controlled Financial Management Company (FIMACO), incorporated on the Isle of Jersey. After initial denials, Central Bank officials admitted the essence of Skuratov’s charges. A former deputy director of the Central Bank explained the bizarre arrangement as a way to hide money from creditors, who might otherwise want to be repaid. “They should build a monument,” he said, to Viktor Gerashchenko, Central Bank president in 1992-1994, for working out the scheme.

Gerashchenko is Central Bank president again today, named to the post after the crash of the ruble last August. He is once again responsible for managing repayment of foreign loans. If Zadornov gets any of the $7.2 billion he is seeking, they should build a monument to the lender.