Thursday, February 24, 2005
Minister forecasts investment boost
This year "should become a year of investment demand in Russia, unlike last, when consumer demand prevailed," economy minister German Gref told cabinet colleagues on Thursday. Joining the World Trade Organization (WTO) was among Russia's key priorities, he said. Ministry figures point to investment in the economy rising a potential 10 percent to 10.5 percent in 2005. Gref said this target could be met, provided "mutual trust between the state, business, banks and the population strengthens."
Given large national projects and impressive performance in certain sectors, investment growth might stabilize at about 10 percent a year, the ministry said.
Assignment of investment grade rating to Russia had created improved conditions for borrowing by Russian companies on domestic and foreign markets, Gref noted, adding that this would boost the flow of investment in a year or two.
On Russia-WTO relations, he said it was necessary to complete preparations for entry this year and that admission would become "a detonator for attracting foreign investment."
To achieve that goal, the government had to improve the climate for investment, ensuring fair competition, developing financial systems and restructuring natural resources monopolies, alongside improving land laws and reforming the judicial system. Investment in the Russian economy would rise in one or two years if those conditions were met, he forecast.
Finance Minister Alexei Kudrin said total capital investment would be RUR 3.342 trillion in 2005, and RUR 4.026 trillion in 2006, against RUR 2.73 trillion in 2004.
Foreign direct investment would rise from $6.6 billion in 2004 to $11 billion this year, Kudrin said. In 2006, it was expected to be $15 billion, in 2007 $19 billion, and in 2008, $23 billion. "Such super-ambitious plans can only be implemented if structural reforms are implemented," the minister warned.
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