Moscow says the two countries are yet to sign a deal writing off US$1.5 billion in debts from the 1980s, despite talks last month

FOREIGN DEBT

According to Ouk Rabun, secretary of state at the Ministry of Economy and Finance, a succession of Cambodian governments have amassed foreign debts to the tune of US $2.37 billion - totalling 20 percent of the country's GDP -  since the 1970s.

THE Russian Finance Ministry has denied reports the country signed an agreement to write off the bulk of Cambodia's debt, following comments from local officials that the two countries had already arranged to cancel $1.5 billion in Soviet-era repayments.

At a National Assembly session Tuesday, Cheam Yeap, chairman of the Committee of Finance, Banking and Audits, said that "Russia has cancelled 70 percent of the debt that the Kingdom owes".

He added that the loans were granted in the 1980s, when  Cambodia was heavily reliant on Soviet aid.

But Konstantin Vyshkovsky, head of Moscow's International Financial Relations Department, told Russian media the Cambodians were jumping the gun on the debt agreement.

"We do not confirm this information," he was reported as saying Tuesday. "The talks are underway. The debt exists and should be settled ... but we have not signed a bilateral agreement."

Cheam Yeap confirmed that the Russians had pledged to erase a large portion of Cambodia's debt following a visit of Assembly President Heng Samrin to Moscow in November 2006, but said the pledge had not yet been formalised in a signed agreement.

"A Russian delegation from the Duma [parliament] came to Phnom Penh in November," he said Wednesday.

"The head of the delegation informed the National Assembly that the government of the Russian Federation will eliminate about 70 percent of the debt."

Delegation head Valery Yazev said that negotiations would resume in early 2009.