TRIPOLI (Reuters) – Russia has agreed to write off $4.5 billion worth of Libyan debt in exchange for contracts with Russian companies, Finance Minister Alexei Kudrin said on Thursday.

Speaking during a visit to Libya with President Vladimir Putin, Kudrin told reporters: “Russia will write off this debt in return for multi-billion dollar contracts for Russian companies.”

He said the debt would be cancelled once payments for the contracts arrived in the bank accounts of the Russian companies.

The main sectors involved in the contracts were railways, energy, infrastructure and the oil and gas industries, he said.

Analysts say the debt was built up during the Cold War, much of it as a result of Soviet arms supplies to Libya.