Zee Beam News

23.05.2005 16:07 MSK MosNews - Experts of the European Bank for Reconstruction and Development (EBRD) published a forecast according to which economic growth in Russia in 2005 won't exceed 5.2 percent. Russian government officials still hope for 6.5 percent growth. EBRD experts also point out a lack of investor confidence and forecast investor flight from Russia. The economic growth forecast given by the bank's experts is the lowest of all the forecasts made by foreign experts. Analysts of the International Monetary Fund believe Russia's economic growth this year may amount to 5.5 percent, while World Bank specialists cited an even higher figure of 6.2 percent. EBRD experts believe that the factors which were responsible for Russian economic growth over the last four years - the fast growth of competitiveness which happened after the devaluation of the ruble in 1998 and the putting into operation of production facilities that had been idle since the perestroika years - have begun to grow weaker since 2004. In such conditions, the bankers say "the medium-term forecast depends on whether [the Russian authorities] are able to keep the investor confidence and continue reforms". The European Bank for Reconstruction and Development has called on Russian authorities for more government transparency and budgetary discipline. "It is necessary to toughen macroeconomic policies after such strong growth in order to cope with budgetary disbalance and decrease inflation," the bank's statement said. Meanwhile, the Russian government is doing completely the opposite. All the international observers agree that the budgetary discipline has been slacking. Preserving investor confidence also seems highly unlikely considering that the taxmen have a free rein, presenting back tax claims left and right. EBRD experts believe that Russia will soon see massive investor flight, as investors begin taking money out of the economy for fear of stricter state control. According to the data provided by the Russian Economy Ministry, in the first quarter of 2005 alone Russian companies and banks took $19 billion out of the country. This is the highest amount in the history of the new Russian economy. In all of last year about $40 billion left the country. Despite these dismal figures, the Russian government continues to hope for investment inflows and counts on them to fuel the economic growth of 6.5 percent. As the deputy Economy Minister Andrei Sharonov told the Internet daily Gazeta.Ru, the ministry so far has no plans to change the economic growth forecast. Meanwhile, economic data shows that in the first quarter of 2005 GDP growth in Russia amounted to 4.9 percent as compared to 7.3 percent in the same period last year. Independent Russian experts view government figures with skepticism and say that the end result is more likely to resemble the forecasts made by the European bankers.