RIA NOVOSTI. Russia will probably have to allow the ruble to firm positions in order to rein in inflation, and the government should begin to roll down “substantial” measures to stimulate the national economy, said a report of the International Monetary Fund (IMF) on the Russian economy. “Coming back to the policy of preventing the ruble from firming could speed up inflation to the two-digit reading," the international financial institution said in a report that was adopted during negotiations with official representatives of Russian authorities. The currency policy should put special focus on control over inflation from the angle of a much flexible currency rate.
The Bank of Russia that “sharply weakened” the scope of control over the ruble’s exchange rate, which is used to cushion the effect of currency fluctuations for manufacturers, still finds more important stability of the ruble’s exchange rate than the efforts taken to rein in inflation, CBR board chairman Sergei Ignatiev said previously. Russian Prime Minister Vladimir Putin pointed out on June 18 that inflation in the country should not exceed 5—7% in the next 3 years.
The IMF also noted in its report that Russia has no strategy how to roll down support measures, and its appearance “will be not possible without intensifying reforms in the state finance sector that were put on hold long ago”. International comparisons suggest Russia stands a chance to slash federal spending in the area of health care and social security, IMF experts believe. They are of the opinion that the pension reform pursued in Russia will prove unviable without cardinal reforms, including the gradual increase of the retirement age.
As the IMF’s report said, Russian authorities planned to start rolling down economic stimulus measures this year and gradually reduce the non-crude deficit of the budget to 9.5% of GDP by 2012 from 13.75% of GDP in 2009. “However, taking into account the amendments to the budget we see an additional modest increase of federal spending in 2010, while authorities seem to have decided to revise the scheduled pace of consolidation for the mid-term outlook," the IMF said in the report. Based on the organization’s forecasts, Russia’s GDP will grow 4.25% in 2010, while inflation will remain fairly slow, reaching 6% by the end of the year.
