Russia, with huge oil and gas reserves, enjoys stability - Putin


MOSCOW, September 27 (RIA Novosti) - President Vladimir Putin said Tuesday that Russia's constant economic growth created an atmosphere of stability in the country which had enough oil and gas reserves for many generations to come.

Putin, speaking live on TV and radio said economic growth this year would hit 5.9% and that real per capita income was likely to come in at between 8.5%-10%. Last year's growth rate was 7.1%.

"During the past several years, Russia's economy has been growing at about 7% year on year. This is much higher than what we are seeing in a large number of developed countries, as well as in economies in transition," Putin said.

Putin said the Central Bank's gold and currency reserves had grown from $12 billion in 2000 to $155 billion in 2005 and that Russia was regularly making payments on its foreign debt.

"All this creates an absolutely stable situation in the country," Putin said. "People can plan their lives in the areas of business and family."

Russia's reserves of oil and natural gas were underestimated, he said.

"They are larger than we think and they will be enough for us and coming generations," Putin said. "Of course, we must treat them carefully, but it is also necessary to change the energy balance in the country."

The president said the Stabilization Fund, where the government accumulated extra funds received from oil exports, had not been set up to solve social issues but to maintain Russia's macroeconomic stability.

The fund was established to prevent adverse effect on the economy. It was created "to prevent price growth, to keep inflation in check, and to make sure that we can solve social issues in these conditions."

Answering a question about the automotive industry, he said the presence of major global car manufacturers would help develop the domestic industry.

"Many foreign companies, such as BMW and some Asian manufacturers, have already arrived on the Russian market and we are holding negotiations with Volkswagen and Mercedes."

Russia, however, he said, had to create the appropriate conditions for these companies to enter the domestic market.

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