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Record capital inflow shows Russia's improved image - expert

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MOSCOW, February 6 (RIA Novosti) - The record high private capital inflow into Russia in 2006 is proof of Russia's improving reputation, a leading Russian expert said Tuesday.

Private capital inflow into Russia reached $41.6 billion in 2006, including $31 billion in direct foreign investment.

"The country's reputation has changed," said Mikhail Delyagin, scientific head of the Institute of Globalization Issues.

He said $41.6 billion is a fantastic figure, of which Russia can justifiably boast.

"The country has learned to "digest" at least part of its incoming petrodollars," Delyagin said.

Delyagin said 2007 will be prosperous from the economic viewpoint, but that there may be changes in economic trends.

In particular, imports into Russia will accelerate while exports will slow. As a result, Russia will receive less foreign exchange and will have to tighten its financial policy, the expert said.

At the same time, considering Russia's available financial reserves, the country will have a couple of years to change its financial policy to prevent any threats to the state's financial and budget stability, Delyagin said.

The ruble is expected to appreciate 10% in real terms in 2007, but the government will be unable to keep inflation within the projected figure of 8.5% due to faster-than-planned growth in rates for gas and electricity, the expert said. According to him, inflation will hit 10% in 2007.

Last year's inflation averaged 9%, down from 10.9% in 2005, according to the national statistics service.

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