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    ZURICH/Switzerland, February 2, 2004 (RIA Novosti) - The Central Bank and the Economic Development and Trade Ministry do not anticipate a significant surge of inflation in the first half of this year. A surge in inflation could prevent Russia from achieving its planned 10% increase in inflation by the end of 2004.

    "No ground for a surge in inflation exists in the next six months," Deputy Minister of Economic Development and Trade Arkady Dvorkovich told RIA Novosti.

    "The monetary base rapidly expanded in the second half of last year. However, this fact was levelled by the real strengthening of the ruble and, partly, by the annulment of the sales tax and the lowering of the value added tax [VAT]," he added.

    Nevertheless, many experts believe that the Russian government will not be able to keep inflation at 10%, as projected in the country's budget, by the end of 2004.

    "I agree that the task is very difficult. There are many factors that we cannot compensate for with our instruments, because we control the exchange rate," Oleg Vyugin, the first deputy chairman of the Central Bank of Russia, pointed out.

    However, "there will be no surge in inflation," he added.

    "A seasonal increase in inflation will occur in January-February, but then it will return to lower than 1%," said Mr. Dvorkovich. "We expect that the 10% target will be achieved." Arkady Dvorkovich and Oleg Vyugin took part in the Russian Economic and Financial Forum in Zurich.

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