AKIPRESS.COM - The Federation Council, the upper house of Russia’s parliament, has ratified an inter-governmental agreement on settling Mongolia’s financial obligations to Russia, TASS reported.

As of December 2010, Mongolia’s unsettled financial obligations to Russia totaled US$174.2 million. The entire sum of these liabilities was overdue debt.

Mongolia’s debt obligations to Moscow emerged in the period until the mid-1990s and comprise debts on loans provided by the former Soviet Union to Mongolia to pay about 163.7 million convertible rubles to the charter capital of the Mongolian-Soviet joint venture Mongolsovtsvetmet, as well as a surplus of 10.5 million clearing U.S. dollars in favor of Russia under clearing accounts opened by Vnesheconombank with the State Bank of Mongolia.

"As a result of bilateral negotiations held in July 2010, the sides managed to reach an agreement, under which Mongolia undertook to repay financial obligations worth 163.7 million convertible rubles and 10.5 million clearing U.S. dollars with a lumpsum payment of $3.8 million," an explanatory note says.

According to the note, the deal envisaged receiving funds from the debtor in freely convertible currency expressed in notional settlement units used under lending and trade operations of the former Soviet Union over the period of 20 years and now withdrawn from economic transactions of Russia and Mongolia.

Russian Deputy Finance Minister Sergei Storchak said earlier that the write-off would involve 97% of Mongolia’s debt.

"The sum involves the debt denominated in the non-existing currency. Actually, the debtor always has a possibility to formulate the issue like this: no currency, no obligations. In this case, we agreed on recalculating the amount into the really existing monetary unit," he said.