(Adds foreign minister on debt size, paragraphs 8-10)

SOFIA, Aug 2 (Reuters) - The Bulgarian government agreed on Thursday to forgive $56.6 million in Soviet-era debt owed by Libya and said the money would instead be paid into an international fund to help Libyan HIV/AIDS victims.

The announcement follows the release by Libya last week of six medics -- five Bulgarian nurses and a Palestinian doctor -- convicted of infecting Libyan children with HIV in the 1990s.

After more than eight years in jail, Libya returned the medics to Bulgaria in a deal which included medical help, political ties between the European Union and Tripoli, and compensation for the families of the victims.

The medics, who had been sentenced to death, have maintained their innocence and said they were tortured into confessing.

The Bulgarian government said in a statement the debt, accumulated for arms and technical deliveries during the communist era, would instead be paid into an international fund set up to help the families of more than 400 HIV victims.

"With these funds Bulgaria will help the Libyan government continue to modernise its medical infrastructure, the treatment of the AIDS-infected children and paying financial aid to the families," the statement said.

It said 27 donors, including 17 governments, nine private companies and one non-governmental organisation, had also pledged to contribute to the fund.

Bulgarian Foreign Minister Ivailo Kalfin said the $56.6 million was Bulgaria's estimate of the debt -- $20 million plus more than $36 million in interest.

"This debt has not been served for over 18 years and there is no clear agreement on its exact amount. So this is our understanding of the amount of the debt," Kalfin said.

"I hope that in additional talks between Libya and the international fund they will come to this number for the amount of the debt."

Deputy Foreign Minister Feim Chaushev was due to hold talks with Libya and sign the debt write-off, the government said.

Libya arrested the medical workers in 1999 and charged them with deliberately infecting more than 400 children with the virus that causes AIDS.

EU newcomer Bulgaria and its allies in Brussels and Washington have said the medics are innocent and point to evidence the epidemic began before they started working in Libya in 1998.

Last month, Libya commuted the death sentences to life in prison after the 460 HIV victims' families were paid $1 million each in settlement financed by the international fund.

That opened the way for the medics' release. The Balkan country's president Georgi Parvanov pardoned the six upon their arrival in Sofia last week.

AlertNet news is provided by