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Russia, Afghanistan sign deal to write off Afghan debt-1

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Russia signed a deal with Afghanistan Monday to write off around 90% of its Soviet-era debt totaling $11.1 billion, with the remainder to be repaid over 23 years
(Recasts lead, para 2, adds details in para 3-8)

MOSCOW, August 6 (RIA Novosti) - Russia signed a deal with Afghanistan Monday to write off around 90% of its Soviet-era debt totaling $11.1 billion, with the remainder to be repaid over 23 years

Finance Minister Alexei Kudrin said the Afghan debt, which was largely accrued from the delivery of Soviet weaponry, would be paid off under the July 2006 agreements reached through the 19-nation Paris Club of creditors, where Russia is a member.

Afghan Finance Minister Anwar-ul-Haq Ahadi, who signed the agreement on the part of Afghanistan, said the remaining debt amounted to $730 million.

The move falls under the Heavily Indebted Poor Countries (HIPC) initiative, a framework created by the International Monetary Fund and the World Bank for creditors to provide debt relief to the world's poorest countries.

More than two decades of conflict and political instability have left Afghanistan one of the poorest nations in the world. The debt relief effort is designed to bolster political and economic reforms the country has been pursuing since a U.S.-led campaign toppled the Taliban government in 2001.

In February, Russia and Afghanistan reached an agreement granting favorable terms to Russian firms seeking contracts to rebuild Afghanistan's rundown infrastructure and work in other commercial areas. Russian-Afghan trade turnover was about $90 billion in 2006, according to Kudrin.

Russia's deputy finance minister, Sergei Storchak, told reporters Monday he appreciated the Afghan government's "courageous move" to acknowledge the military debt to "the now non-existent country." He said the countries had resolved the issue in a civilized way, and that Russia had backed its claim to the outstanding loans it issued to Afghanistan in 1960-1991.

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