Indonesia and Russia in Paris Club talks this week

Indonesia and Russia in Paris Club talks this week

PARIS (Reuters): Two of the world's most embattled economies
hold talks with the Paris Club of creditor nations this week as
Indonesia seeks a rescheduling of debt payments and Russia comes
to explain why its own payments are running late.

Indonesia is seeking a rescheduling of payments falling due on
its estimated US$54 billion sovereign debt as part of a bail-out
package worked out with the International Monetary Fund (IMF) two
months ago.

Russia meanwhile is due to explain to its creditors why it has
fallen behind on repayments of debt inherited from the former
Soviet Union. No detailed negotiations are expected in Russia's
case.

Paris Club sources said creditor nations would discuss
Indonesia's request for a rescheduling of debt repayments on
Tuesday and Wednesday.

With the benefit of an IMF-approved bail-out behind it,
Indonesia's negotiations are expected to go relatively smoothly.

Under discussion will be a rescheduling only of repayments due
over a relatively short period of time -- somewhere around six
months to two years.

Earlier this month, IMF director for Asia-Pacific Hubert Neiss
said he was optimistic about a Paris Club deal.

"There are many, many details to be settled. I think with
goodwill and flexibility on both sides, it is possible and
feasible that the whole agreement can be reached in one meeting,"
he told Reuters Television.

Indonesia called in the IMF to agree an economic stabilization
program after being hit by its worst economic crisis in three
decades. It was due to be represented at the Paris Club talks by
Finance Minister Bambang Subianto.

In contrast to the detailed discussions with Indonesia, the
Paris Club talks with Russia were expected to be purely an
exchange of information rather than a negotiation.

Russian Deputy Finance Minister Mikhail Kasyanov told Reuters
last week that Moscow was not going to ask the Club for any
restructuring nor propose other measures.

"Now we only need to give all information," he said.

Russia told the Paris Club earlier this month there were
delays in its repayments to some of its members.

Germany, by far Moscow's biggest creditor, said earlier this
month that Russia missed virtually all of an 800 million mark
($476 million) interest payment due on August 20 on sovereign
debts inherited from the former Soviet Union.

Germany appears however to have been the worst affected by the
delay in repayments and French Finance Minister Dominique
Strauss-Kahn said last week that the total amount of non-payments
was "not significant".

The Paris Club agreed a major rescheduling of debt inherited
from the former Soviet Union in 1995 and Russia has since joined
the Western creditors grouping as a member.

The Paris Club is an informal gathering of creditor nations,
dominated by the Group of Seven rich nations and chaired by the
French Treasury. Its main purpose is to ensure all creditors get
treated equally in any debt rescheduling.