Russian Loans Remain Unpaid

The government is expected to fail to meet its guarantees for Russia's unpaid loans to 10 of the nation's banks again next year.

In 1991, Seoul provided assurances for Russia for the entire principal and 90 percent of fixed interest on $1 billion worth of loans extended by 10 domestic banks, including the Korea Development Bank, Hanvit Bank, Korea Exchange Bank and Chohung Bank. The total principal and interest owed to the banks has grown to more than $1.6 billion, and the government-guaranteed amount stands at $1.45 billion.

The government ministries have been unable to agree on a suitable repayment method for Russia's loans, the Ministry of Finance and Economy said Thursday. The ministry is arguing that the government should begin paying down the total with money drawn from the budget beginning next year.

But the Ministry of Budget and Planning opposes that proposal. "It is difficult to allocate budget funds for the guarantees when repayment periods and methods haven't been determined," a budget ministry official said.