DUBAI -- Saudi Arabia has denied that it agreed with Russia to reschedule a $750 million debt and said the money was owed to Saudi banks and had yet to be paid.


The oil-rich kingdom also denied it had agreed to set up an investment fund in Russia.


The official Saudi Press Agency quoted Finance Minister Sheikh Mohammed Ali Abal-Khail as saying Monday that two Saudi banks, which he did not name, had extended a bank loan to the Soviet Union in 1991, prior to its collapse.


"As the Russian Federation has made an international undertaking to assume responsibility for the loans signed by the Soviet Union prior to its collapse, the Saudi banks demanded it pay the due amount of the loan, $250 million," he said.


Abal-Khail said the issue was discussed with Russian deputy prime minister and chief debt negotiator Oleg Davydov, who had accompanied Russian Prime Minister Viktor Chernomyrdin on a visit to Saudi Arabia which ended Sunday.


Interfax quoted Davydov as saying in Riyadh that Saudi Arabia had agreed to reschedule repayments of a $750 million loan to Russia and that the agreement would mean Moscow could defer until 1996 repayment of the first $100 million.


Interfax said the debt was part of a $750 million Saudi credit made to the former Soviet Union in 1991.


Davydov had told RIA news agency that Russia and Saudi Arabia also agreed to set up an Arab investment fund in Russia.


But Abal-Khail said Davydov suggested setting up a joint investment fund by the private sector and was told "that the proposal concerned the private commercial banking sector and the Saudi government was not a party to it, and that Saudi banks would be informed of that. Nothing more was discussed."