President Vladimir Putin invited Finance Minister Alexey Kudrin to come to Sochi discuss the draft budget for 2007 and, more importantly, the growing ruble.
Photo: Dmitry Azarov
| Other Photos |
 |
|
 |
Putin Warns Against Strong Ruble
Yesterday’s meeting of Russian President Vladimir Putin and Finance Minister Alexey Kudrin confirmed that the strong ruble hampers Russian companies. Vladimir Putin requested the Finance Ministry to stop boosting the national currency. The Central Bank and Government will have to battle inflation without resorting to ruble-related measures.
Russian President Vladimir Putin invited Finance Minister Alexey Kudrin to come to Sochi, in southern Russia, discuss the draft budget for 2007. Talks, however, focused the strengthening of the ruble that the president called critical. The lofty ruble is able to make the country’s economy less competitive, the president said, apparently expressing the opinion of Russia’s major companies. Putin is also concerned about a steep rise in import.
Russia’s financial chief promised to the president that the ruble would grow no more than 4.7 percent while inflation will close at 8 percent. Kudrin backed his promise by budget forecasts and the draft of the-so called gas and oil budget which is supposed to trend down inflation and the ruble. Experts note that the shortest way to restrain the growing ruble is cutting on budget expenditures.
However, it is not clear whether the Financial Ministry’s initiatives – among which is a suggestion to withdraw and keep a large portion of Gazprom’s export profit – will be endorsed.
Alexey Kudrin also forecast that import would go up 27 percent next year. But the pace of import growth is much higher now. Imports rose 33.9 in the first half of 2006. Thus, restricting import without state regulation seems a tall order.
Analysts suggest that the real ruble exchange rate would fall only in case oil prices fall, bringing export profits down as well.
www.kommersant.com
All the Article in Russian as of Aug. 23, 2006
|
|
|
