MOSCOW German Chancellor Gerhard Schroeder prepared to fly to Moscow Saturday for talks with Russian President Vladimir Putin amid concern that Russia is to postpone repayment of its 48 billion dollar Soviet-era debt, AFP reported.

Germany is Russia's biggest creditor, accounting for almost half the debt carried over from the former Soviet Union, and Schroeder's nominally private two-day visit is likely to focus on the vexed question of Moscow's repayment schedule.

Russia announced Friday it would delay this year's first payments on its 48 billion dollar debt to the Paris Club of International Government Creditors.

The move, described as "not a default, but a technical delay of repayments" by Deputy Finance Minister Alexei Ulyukayev, provoked a swift response from Berlin.

"Given the current good health of the Russian economy, a unilateral suspension of payments by Russia is not acceptable," the German Finance Ministry said in a statement.

Schroeder was expected to use the Moscow talks to reiterate Germany's view that there is no need to cancel any of Russia's debts or to delay any of the repayments.

But he would also seal agreement on a German initiative, which Putin has described as "extremely positive," to convert Moscow's outstanding debts to Germany into shares in Russian companies, ITAR-TASS cited a high-ranking Kremlin source saying.

The debt-equity swap was "an interesting ploy that should be given a detailed work out," the source said.

On January 1, Russia's debt to members of the Paris club stood at 48.3 billion dollars, of which 21.1 billion dollars is owed to Germany, its principal creditor.

Russia defaulted on the debt in the 1991 collapse of the Soviet Union and again in the August 1998 financial crisis, in which the rouble's value plunged.

The bilateral talks were due to be held during a two day private visit to Moscow by the German chancellor, his wife Doris Schroeder-Kopf and daughter Clara.

The Kremlin boss invited the Schroeder family to celebrate Orthodox Christmas in Russia on January 7, which coincides with his wife Lyudmila Putin's birthday.

German diplomatic sources played up the informal nature of Schroeder's visit but their Russian counterparts stressed that weekend trips to various tourist sites, including the Bolshoi Theater, would provide ample opportunity for the two leaders to broach a wide range of subjects.

Putin and Schroeder have struck up a workmanlike relationship since the Russian leader, who speaks fluent German picked up while he was a KGB agent in Soviet-era East Berlin, assumed power in the Kremlin a year ago.

Schroeder was due to arrive in Moscow at around 2:00 p.m. (1100 GMT) Saturday, and to return to Hanover in Germany late Sunday.