The Paris Club of creditor nations agreed Friday to allow Russia to buy back US$15 billion (Ђ11.8 billion) of mainly Soviet-era debt, the group said in a statement.
The club said its 19 member governments would choose individually whether to participate in the buyback, but said "an overwhelming majority" would accept Russia's terms.
Soaring revenues from Russia's oil exports have offered Moscow the chance to improve its balance sheet and pay off foreign debt. Friday's deal would see Russia buy back debt at face value - an offer some countries resisted because it would deprive them of a steady stream of fixed-rate interest payments.
"The prepayment offer confirms Russia's status as a Paris Club success story," the group said.
The deal reduces Russia's debt to the Paris Club to about US$25 billion (Ђ19.7 billion).
The buyback will take place between June and August, the group said.
Sergei Storchak, a senior Moscow finance official who negotiated the deal, said it would cut Russia's annual interest payments by about a third, to US$1.3 billion in 2006.
"The implementation of this agreement will allow us to have our financial (planning) much more accurate and much more predictable," he said.
He said Moscow hopes to begin preparations by the end of the year on buying back a further $6 billion to $10 billion in debt from the Paris Club.
Paris Club President Jean-Pierre Jouyet said Russia's two largest creditors, Germany and Italy, were among governments that had committed themselves to take part in Russia's debt buyback.
LAURENCE FROST, AP Business Writer