To the great extent, the high inflation in Russia roots in high prices for raw. At the same time, the non-raw engines of inflation, which are common to economies of emerging states, are getting more vital here.
Photo: Alexander Chizhenok
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Another Inflation
For Russia’s economy, one of the biggest risks is inflation, signaled the OECD report presented yesterday. The Stabilization Fund is the key instrument to sterilize excessive liquidity, which is blamed on the money flows generated from crude/raw export.
Russia should step up allocations to the Stabilization Fund, the OECD analysts said. One of concerns is uneven distribution of tax burden between production industries of the country.
The burden is very heavy for oil companies, where taxes account for $0.84 of each dollar of crude cost taken above the cut-off price. But the gas companies have just $0.47, while other raw producers benefit from taxation that is even softer than for some processing companies. But these companies account for 15 percent of all marketing revenues of economy that aren’t sterilized at all.
OECD’s proposal is to increase the Stabilization Fund by excessive revenues of all raw companies, not only the oil ones. OECD also suggests indexing the minimal size of the Stabilization Fund in view of the GDP growth. Today’s amount is just 500 billion rubles, i.e. less than 2 percent of the GDP, which will hardly suffice for stabilizing economy if the market opportunities deteriorate.
To the great extent, the high inflation in Russia roots in high prices for raw. At the same time, the non-raw engines of inflation, which are common to economies of emerging states, are getting more vital here.
One of them is the Balass-Samuelson factor. In this situation, the economy is split into two sectors – the branches of traded goods (competitive on the global market) and non-traded goods (sold on domestic market exclusively). With free labor market, these two sectors are getting more even, and the salary in non-traded sectors goes up ahead of the labor efficiency, driving up the inflation.
www.kommersant.com
All the Article in Russian as of Nov. 28, 2006
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