LONDON -- Ukraine will make principal and interest payments starting Jan. 1 on its share of the external debt of the crumbling Soviet Union, said Boris Sobolev, deputy minister for foreign economic relations.
"We will pay principal as well as interest," Mr. Sobolev said. "In 1992 we have to pay $2.5 billion in debt service. This will endanger our economic reform, but has to be done."
Mr. Sobolev said Ukraine had agreed to take on 16.3% of the Soviet debt but could not specify a figure in dollars.
Firm Decisions Expected Soon
the republics will agree on a total figure within the next few days, he added.
The Soviet debt is put at $60 billion to $70 billion. Mr. Sobolev gave a figure of $82 billion but said it included $5 billion of internal debt and other unspecified amounts.
Eight Soviet republics recently signed a memorandum with the Group of Seven major industrialized countries, which called for deferral of principal payments on the Soviet obligations to bilateral official creditors and similar treatment from commercial creditors.
Prelude with Paris Club
Earlier in December, 12 republics, including Ukraine, authorized Vneshekonombank, the Soviet foreign trade bank, to seek a rescheduling of the official debt with the Paris Club of official creditors.
"We had no choice," Mr. Sobolev said. "We were called to an emergency meeting in Moscow and told how serious things were. The problem is that they had been hiding the real situation for a long time."
Shortly after, Vneshekonombank informed commercial creditors it was suspending principal payments on the debt.
Mr. Sobolev noted that representatives of Vneshekonombank bank will continue meetings with bank creditors led by Germany's Deutsche Bank on the details of the suspension.
"If Vneshekonombank restructures the debt in a way that does not affect our creditworthiness, we can authorize that," Mr. Sobolev said. "We now have the power to supervise Vneshekonombank."
Asked whether the freeze on principal payments would be followed by a halt in interest servicing, Mr. Sobolev said, "Interest is not endangered."
Mr. Sobolev said Ukraine plans exports of $8.5 billion in 1992, which would give it enough hard currency to service its debt obligations.