Moscow, Prague Ink $3Bln Debt Pact

The Czech Republic and Russia have agreed on settlement of Russia's debt from the Soviet Union era on Monday in a deal that could set a precedent for Russia's debt talks with other former communist countries.

Prime Minister Mikhail Kasyanov told a news conference after meeting Czech Prime Minister Milos Zeman that the Czech Republic would forgive Russia part of the $3.6 billion debt and spread out the payments of the rest.

The part of the debt which we were due to pay a long time ago will be lowered, and the rest will be restructured until the year 2020, he said.

Czech Deputy Finance Minister Ladislav Zelinka told reporters the Czechs agreed to sell a $2.5 billion portion of the debt to a private company, Falkon Capital, for slightly over 20 billion crowns ($547 million).

The remaining part of the debt will be paid between now and 2020 in cash, goods and into a guarantee fund for Czech exports to Russia.

The Czech Republic, a successor to former Soviet Union satellite Czechoslovakia, is not a member of the Paris Club of Russia's sovereign creditors.

Zelinka said Falkon Capital, a little-known company, would pay its dues to the Czech government by the end of this year. The government inked 20.4 billion crowns from Russian debt repayment into the 2002 budget draft.

People's Daily Online ---