Russia has written off 1.104 billion US dollars of debt owed by Ethiopia, the Ethiopian Embassy in Moscow announced Thursday.

The deal, clinched Monday in Moscow, represents the bulk of Ethiopia's 1.268 billion dollar debt to Russia, which is the eastern African country's largest creditor, an embassy spokesman was quoted by Interfax as saying.

The rest of the debt is to be repaid in cash over a period of up to 30 years. Payments are to be made twice a year, in March and September.

Writing off the debt would save Ethiopia resources for its poverty reduction program and help the country build schools, hospitals and other social infrastructure facilities and improve water supply, the spokesman said.

Russia wrote off the first portion of Ethiopia's debt in June 2001, chopping off 4.8 billion dollars that represented 80 percent of Ethiopia's entire debt to Russia. The rest was restructured under the rules of the Paris Club of creditors, of which Russia is a member.

In a related development, a Russian Finance Ministry official said Thursday Russia will continue negotiations with Iraq over a debt write-off agreement and hopefully sign it this year.