Russia and Ukraine get time to pay

HORST KOHLER, secretary of state in the German finance ministry and co-ordinator of next week's world economic summit in Munich, confirmed yesterday that Russia and Ukraine are to be offered an unprecedented moratorium on foreign debt repayment.

He said in Bonn that the leaders of the Group of Seven richest industrial states wanted to give the two countries a 'breathing space' to pay back the dollars 65bn in foreign debts built up by the former Soviet Union and the interest payments on the debts.

As a condition for the moratorium the G7 countries would insist that Russia came up with a plan to contain its budget deficit and inflation, Mr Kohler added.

The US Treasury Secretary, Nicholas Brady, dropped similar hints earlier this week.

He suggested that Russia, which is responsible for repaying more than 80 per cent of the foreign debts, and Ukraine would be given more time.