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    IMF: Tax reduction in Russia will cause inflation growth

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    MOSCOW, June 3 (RIA Novosti) - Head of the IMF mission in Russia Paul Thomsen said easing the tax policy in Russia would lead to considerable inflation growth.

    "We believe that substantial alleviation of the tax policy will result in a considerable growth in inflation pressure," he said at a press conference Friday.

    According to Thomsen, high inflation will lead to the strengthening of the ruble's real effective exchange rate and will eventuate in a further growth of imports. For this reason, easing the financial budget will hardly help short-term growth and will lead to a growth of inflation in the long term.

    He said that the government submitted amendments to the budget this week. In accordance with these amendments, it plans to sizably increase budget expenditures.

    "These amendments will considerably increase the degree of financial alleviation," Thomsen said.

    Thomsen said that inflation, currently running at 13.7%, would be very difficult to get down to single digits, and that it would be achievement if it gets down to 10.5-11%.

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