The London Club has agreed to write off more than half of Serbia's $2.8 billion debt to the group and reschedule payments on the remainder over the next 20 years

The London Club has agreed to write off more than half of Serbia's $2.8 billion debt to the group and reschedule payments on the remainder over the next 20 years, the government said Friday. Finance Minister Mladjan Dinkic said the interest rate for the remaining debt of $1.08 billion would be an annual 3.75 percent over the first five years, and 6.75 percent for the following 15 years. "This is a huge relief for our economy," Dinkic said in announcing the write-off of about $1.7 billion in debt. The deal with the group of commercial lenders came nearly three years after Serbia-Montenegro, the Balkan union formerly known as Yugoslavia, agreed with the Paris Club of sovereign lenders to slash the $4.4 billion owed by the country by 66 percent. The Paris Club, a 19-nation group, deals with loans underwritten by state guarantees. But negotiations with the commercial lenders of the London Club were much tougher, Dinkic said, because Serbia insisted "on conditions it could endure." The London Club's initial offer was only a 20 percent write-off.