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Treasury Secretary Robert E. Rubin and VietnameseFinance Minister Nguyen Sinh Hung agreed today that Vietnam willrepay the United States approximately $145 million in economicdebts owed by the former Republic of Vietnam. A downpayment of more than $8.5 million of interest is due within30 days of signing the agreement.

This is a significant step in thenormalization of relations between our countries and theintegration of Vietnam into the international financialcommunity, Secretary Rubin said. The signal sent bythis agreement will be important to the rest of the world inbuilding confidence in Vietnam in a way that will benefit itseconomy. With Vietnam’s continued cooperation in accountingfor American POWs and MIAs, we look forward to working withVietnam as it continues to make progress toward structuralreforms, a market-based economy and regional and global economicintegration.

This agreement, in part, implements themultilateral debt agreement Vietnam reached with the Paris Clubof Western creditor countries in December 1993. As part of theParis Club agreement, Vietnam acknowledged its responsibility forthe economic and social debts of the Republic of Vietnam -- thegovernment in the south prior to April 30, 1975. The Paris Clubagreement called on government creditors to provide formal reliefon overdue debt payments as of year-end 1993.

The bilateral agreement between Vietnam and theUnited States covers the entire amount of economic debtoutstanding to the United States. The loans involved were made bythe United States on concessional terms from 1960-1975 to supportthe development of economic infrastructure and to finance theimportation of agricultural and other commodities by Vietnam. Inaddition, the United States extended about $1 billion in economicgrants during the same period.

Regular payments under the agreement will beginin July and extend until the year 2019.