IMF forecasts inflation in Russia at no less than 13.7%

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MOSCOW, June 6 (RIA Novosti) - The rates of consumption A commission of the International Monetary Fund (IMF) said consumption in Russia grew considerably faster than the economy, and, therefore, inflation would go beyond the level projected by the government to reach at least 13.7% by the end of the year, the Noviye Izvestia daily said Monday.

IMF experts monitor the state of the Russian economy on an annual basis. In the mid-1990s, their conclusions were essential for Russia to get regular IMF loans. However, because Russia made an early repayment of its $3.3 billion debt to the IMF last January, Russian authorities can feel more confident when talking to the IMF and can consider its recommendations as non-binding advice.

Head of the IMF mission in Russia Paul Tomsen announced the basic points of the IMF report on Friday. The government of Russia was advised to limit expenditures in the budget sphere and finally begin reforms. Also, the IMF experts severely criticized the tax innovations of Russian government officials.

Russian specialists had varying views on the IMF report. Analyst Anton Struchenevsky from Troika Dialog brokerage agreed with the IMF's conclusions. He said that the Yukos case, tax claims against major companies, and vague economic policy have led to slower economic growth and an imbalance between internal demand and internal supply. As a result, prices have started to rise.

Sergei Nikolayenko, an expert from the Economic Analysis Bureau, said, "Despite the fact that the IMF said household consumption was on the rise, this consumption is still insufficient because it started from a very low level."

Former Russian Finance Minister Alexander Livshitz said because citizens have started to earn more, authorities should encourage households to both spend and save money. "The first option is to let U.S. currency appreciate to allow people to save some money in U.S. dollars," Livshitz said. "Authorities should also think about how to support unit investment trusts. They can also think about issuing government securities for citizens and raising deposit interest rates at state-run banks."

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