WASHINGTON -- U.S. bankers should not be intimidatd by their experience in Latin America as they weigh lending opportunities in the Soviet Union, said Horst Schulmann, managing director of the Institute of International Finance.
'The Soviet Union has the economic wherewithal to service all debt," Mr. Schulmann said, adding that as of Oct. 2 it was current on all obligations.
In contrast, banks have incurred an estimated $46 billion loss so far from loans to 15 developing countries designated by former U.S. Treasury Secretary James Baker for financial assistance.
Servicing Problems Emerge
Commercial banks have shown some reluctance to lend money to the Soviets, especially after the country's State Bank for Foreign Economic Affairs, or Vneschekonombank, acknowledged Aug. 21 it might have problems servicing Soviet debt.
At a press conference last week, Mr. Schulmann cited statistics indicating theee Soviet economy is on more solid ground than Latin America. The Soviets' ratio of debt to gross domestic product was estimated at 15%, compared with the 40% average across Latin America.
More Debt than Exports
The Soviet debt is about 150% of exports, while the Latin America average is 300%.
Mr. Schulmann, whose organization represents 135 international banks, said banks have $40 billion in claims on the Soviet Union, equaling two-thirds of the total debt. But about half of thee loans are backed by Western governments.
Ms. Hockstader writes for the Medill News Service.