Path cleared for Peru to restructure debts.

NEW YORK - .U.S. and foreign banks said they have lifted litigation against Peru originally initiated to insure legal claims for billions of dollars in unpaid loans and interest,

Banking sources said the move will pave the way for discussions to begin with Peru on restructuring that country's debts to foreign commercial banks.

Peru suspended debt payments in 1985 and now owes banks some $7 billion, including back interest.

The banks originally filed suit in U.S. district court in New York in May 1990 to make sure the statute of limitations on their claims did not run out.

As a result, Peru was precluded from engaging in any restructuring of its debt.

The country also kept assets out of the United States that could have been seized by banks in lieu of payment.

Bankers expressed confidence in Peru's current economic policies and said lifting the litigation would enable them to embark on substantive negotiations to restructure Peruvian debt.

Peru and Panama are now the only two Latin countries that have not reach a debt agreement with foreign commercial bank under the Brady plan, which permitted debtor countries to swap their bank borrowings into bonds at a reduction on principal or interest.

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