Saturday, May 30, 2015Saturday, May 30, 2015

Russia writes off 90 per cent of North Korea's debt, eyes gas pipeline

Published on Apr 19, 2014 6:34 PM

MOSCOW (Reuters) - Russia's Parliament has agreed to write off almost US$10 billion (S$12.5 billion) of North Korea's Soviet-era debt, in a deal expected to facilitate the building of a gas pipeline to South Korea across the reclusive state.

Russia has written off debts to a number of impoverished Soviet-era allies, including Cuba. North Korea's struggling communist economy is just 2 per cent of the size of neighbouring South Korea's.

The State Duma Lower House on Friday ratified a 2012 agreement to write off the bulk of North Korea's debt. It said the total debt stood at US$10.96 billion as of Sept 17, 2012. The rest of the debt, of US$1.09 billion, would be redeemed during the next 20 years, to be paid in equal instalments every six months. The outstanding debt owed by North Korea will be managed by Russia's state development bank, Vnesheconombank.

Russia's Deputy Finance Minister Sergei Storchak told Russian media that the money could be used to fund mutual projects in North Korea, including a proposed gas pipeline and a railway to South Korea.

Enjoy 2 weeks of unlimited digital access to The Straits Times. Get your free access now!