Major Soviet Import Drive Expected : Italy to Send $775 Million in Credits to Moscow

Italy announced Monday that it will provide the Soviet Union with $775 million in export credits, which may help Moscow snap up almost $5 billion in credits from Western Europe by the end of the week.

Italy’s Foreign Trade Ministry said it had signed an accord to provide Moscow with a credit worth 680 million European Currency Units. This followed news last week that West German banks had agreed to offer the Soviet Union a $1.6-billion credit package.

The German package was signed in Frankfurt Monday by officials of the Soviet Foreign Trade Bank and a 52-member West German bank group. Banking giant Deutsche Bank AG said the money will be used primarily to expand the Soviet food, leather, textile and clothing industries.

In addition, British banks will probably announce a $2.6-billion credit facility to pay for British exports to the Soviet Union later this week, a spokeswoman for the British Department of Trade and Industry said Monday.

The Soviet Union appears to be preparing for a major import drive. Western Europe is eager for profits derived from helping the Kremlin upgrade Soviet industry. Several nations want a slice of the new, expanded Soviet markets as President Mikhail S. Gorbachev makes his economic reforms.

The Italian credit was signed Oct. 14 in Moscow, sponsored by a loan consortium organized by the state-owned Mediocredito Centrale, a ministry spokeswoman said. The credit will mainly be used to buy Italian machinery and for a plant for making consumer goods.

Italian Prime Minister Ciriaco De Mita and Foreign Trade Minister Renato Ruggiero had traveled to Moscow to help Italian industry win a larger share of the Soviet market.

In London, British banks are expected to announce later this week that a new credit facility will be set up to pay for British exports to the Soviet Union, the trade spokeswoman said Monday.

“The Russians were told that British banks are keen to offer a trade credit facility and hope to make a sound proposal shortly,” she added.

A press conference is scheduled Thursday.

A British-Soviet joint commission began three days of trade issue talks in London Monday, which are likely to result in a new protocol trade agreement, she said. Bankers said the British credit facility is expected to be 1 billion to 1.5 billion pounds (1.75 billion to 2.6 billion U.S. dollars), with a maturity of up to 8 1/2 years.

Western bankers in Moscow said other credit lines may follow the lead of this week’s packages. A major French bank is also debating whether to extend a credit facility, they added.

The Soviet Union has proved itself a good borrower in the past, the bankers said, so they generally have no worries about its ability to repay these new debts--despite Gorbachev’s lack of obvious progress so far in revitalizing his economy.

“The thing is that Western banks are willing to give more money than the Soviet Union is willing to accept,” one banker said.

Soviet officials tend to be tough negotiators in terms of fixing credit terms, the bankers said, but they fulfill these terms carefully and promptly once established.

The West German credit is the country’s second-largest package ever granted to Moscow, topped only by a credit of 4 billion West German marks ($2.2 billion) granted in 1982 for building a gas pipeline.

Bankers said the maximum term of credits will probably be 8 1/2 years, although no single or fixed interest rate has been attached to the facility.

In contrast with the Italian credit line, the German facility carries no government guarantee, although it will be ceremonially endorsed by Chancellor Helmut Kohl and Gorbachev Monday in Moscow.