Russia to repay USSR’s foreign debt
moscow — A quarter of a century after the fall of the Soviet Union, Russia is finally set to pay off all the foreign debt it inherited from the vanished Communist empire.
Keen to establish a reputation of a reliable borrower — despite Western financial sanctions over the Ukraine conflict — Moscow announced last week it would pay off $125.2 million in Soviet-era debt to Bosnia-Herzegovina within 45 days.
The payment “completes the settlement of the external public debt of the former USSR, which is a historic event,” said Russia’s deputy finance minister Sergei Storchak.
In February, Moscow paid $60.6 million to Macedonia.
After the Soviet Union’s collapse in 1991, Russia assumed responsibility for its foreign debt of some $70 billion.
This was mostly contracted during the difficult perestroikaera from 1985 to 1991, a time of failed attempts to reform the USSR’s dysfunctional political and economic system. This commitment proved a painful burden in the 1990s as Russia faced catastrophic economic problems that culminated in a humiliating default on its foreign debt in 1998. But in 2006 — thanks to a steady influx of petrodollars since the early 2000s — Russia was able to pay off its debts to 17 major creditor-countries in the so-called Paris Club.
A payment of more than $20 billion — or 95 per cent of the value of all Soviet-era loans — was made eight years after the 1998 default.
Russia has also allowed itself the luxury of cancelling some country’s debts, with Cuba the latest in 2014. The remaining debt chiefly consisted of “commercial” debts that resulted from the imports of goods to the Soviet Union from ally countries. Such debts were formed “in a strange way”, Anatoly Aksakov, head of the parliament’s economic market committee, told RIA Novosti state news agency.
He questioned how such countries turned out to be creditors of the Soviet Union even though it was “a very rich country”.
In the case of the former Yugoslavia — which the USSR provided with military equipment in exchange for consumer goods — Russia faced the tricky task of dividing up the debt among the countries that emerged from its breakup. —