Moscow Suspends Its Repayment of Loans : Finance: Foreign bankers say the debt-relief action will hurt the Soviets’ future borrowing power.

The Soviet Union notified foreign banks Wednesday that it will suspend billions of dollars in loan payments starting today, a move that bankers said will badly damage what little credibility as a borrower Moscow has left.

Spokesmen for the Soviet Bank for Foreign Economic Affairs said the suspension came as part of an agreement on debt relief reached last month with the Group of Seven major industrialized countries. They said they had warned private bankers a day earlier that the suspension would be extended to them.

But concerned bankers in the United States and Germany, the Soviet Union’s largest creditor, said that suspending repayment of loan principal amounted to a financial failure. Currency markets reacted immediately as grave doubts were cast on the Soviet Union as a future borrower.

“Clearly, this is a unilateral breach of existing contractual obligations, which is a very serious matter,” said Horst Schulmann, former German economics minister and now managing director of the Institute of International Finance in Washington. “It will seriously affect the credit-worthiness of the republics for a significant period of time.”

Under the Group of Seven agreement, creditor countries postponed for one year the Soviet Union’s principal payments on the debt it owes their governments. But that agreement recommended only that private Western banks and other governments extend the same terms to Moscow, and many of the banks were reluctant to do so.

For a country of the Soviet Union’s size, its foreign debt, estimated at about $80 billion, is not very large. Most of the money is owed to foreign governments or is guaranteed by governments; banks are at risk for only about $17 billion, according to Schulmann.

But the country’s economic disintegration has left the government so strapped for hard currency that it has repeatedly had to stop dollar, sterling and deutschemark payments at the Foreign Trade Bank in recent weeks.

The bank, known as Vneshekonombank, said Wednesday that it is halting principal payments on medium-term debts incurred before 1991, and that the moratorium will continue through Dec. 31, 1992. The suspension does not apply to interest payments, the bank stressed.

Soviet economic authorities also authorized Vneshekonombank on Wednesday to make a formal request for rescheduling of the principal payments that are due the so-called Paris Club, a grouping of Western creditor nations, in 1992, the independent Moscow news agency Interfax reported.

Interfax reported that all but one of the remaining 12 Soviet republics agreed Wednesday to a formula for sharing responsibility for the foreign debt. Only the Central Asian republic of Uzbekistan, a major Soviet gold producer, refused to accept any share of the outstanding debt.

Under the agreement, which distributes assets as well as debts, Russia would assume 61.34% of the debt, Ukraine would take 16.37% and the rest would be divided among the other 10 republics, according to Interfax.

State assets include gold and diamonds, but Russia is reportedly claiming the entire diamond fund and its disposition remains in dispute.

Group of Seven officials made financial assistance to each of the republics conditional on their agreement to sign the debt-sharing pact.

News of the payment suspension, along with warnings from high Soviet officials that another Soviet coup may be in the offing, shook the German mark on currency markets, sending it down to 1.602 from 1.608 against the dollar. Germany, as the Soviet Union’s biggest creditor, stands to lose the most from its political and economic instability.