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    IMF: GDP to grow by 5.5% in 2005; difficulties with restraining inflation

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    MOSCOW, June 3 (RIA Novosti) - The 2005 Russian GDP will grow 5.5%, but it will be difficult to keep inflation at 8.5%, said IMF head in Russia Paul Thomsen at a news conference Friday.

    According to Thomsen, the IMF's forecast for the GDP is uncertain in terms of oil exports and the investment climate.

    He noted growth had started to slow since the middle of 2004 (the time of the IMF mission's last visit to Russia) and was happening when the aggregate demand rose. Because growth in imports ensued, the economy was affected by inflation.

    Thomsen said that it is not the figure itself that is important in the IMF forecast, but it is important to show that the government and the Central Bank prioritize lowering inflation.

    "We think that it is necessary to put a somewhat stronger emphasis on restraining inflation," Thomsen said.

    He said, the Central Bank should show more flexibility in its hard currency policy and lower the amount of interventions at the hard currency market, having made changes in the formation of the hard currency exchange rate.

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