Russia Suspends $170 Million in Mongolia Debt

Putin looks at Mongolian President Elbegdorj
Russian President Vladimir Putin, left, and his Mongolian counterpart Tsakhia Elbegdorj attend a signing ceremony at the national parliament building in Ulan Bator, September 3, 2014. B.Rentsendorj/Reuters

Russia has written off the vast majority of Mongolia's debt owed to Moscow, estimated at around $172 million according to documents uploaded on the Russian state legal archive site.

Since before the formation of the USSR, Russia has retained a friendly relationship with Mongolia—a country whose only other main ally in modern times has been its historical rival China. The Kremlin has previously aided Mongolia through subsidies, but it struck a massive deal in 2010 to write off over 97 percent of Ulan Bator's debt.

The deal took half a decade to pass through all levels of Russian legislation receiving the upper house of parliament's approval last week. President Vladimir Putin has now signed the decree freeing Mongolia of over $170 million in state debt, ranging back to loans granted to the country by the USSR.

Officially the amount of debt suspended is $174.2 million, however Russian business news channel RBC estimates, adjusting to the current economic climate this amount would now equal $172 million.

Mongolia's richness in natural resources in the form of most types of minerals and its as yet poor infrastructure have made the country ripe for development, with estimates predicting that between 2010 and 2020 coal extraction alone could triple its economy.

Despite Russia's ongoing economic crisis it has suspended the debt of Central Asian neighbor Uzbekistan ($88.9 million) and the country of Cuba ($30 billion) in 2014.