Zee Beam News

30.05.2005 15:54 MSK MosNews - Russia's economy is slowing despite record high oil prices as weakening business confidence, fuelled by the breakup of oil firm Yukos, saps growth, an Economy Ministry official said on Monday, May 30. "The economy's growth rate has slowed appreciably. What is this linked to? The value of work is falling significantly in the oil and gas industry, which is the motor of our economy," said Andrei Klepach, head of the Economy Ministry's macroeconomic forecasting department, quoted by the Reuters agency. A government-orchestrated breakup of Yukos, formerly the country's largest privately-owned oil company, which was pushed to the brink by huge back tax claims, has sent shock waves through the business community. Klepach told a news conference that falling investment reflected a weakening in business confidence in the aftermath of the Yukos affair. "We are not in a position fully to exploit our potential. We observe a fall in investments and oil production despite enjoying a windfall from high oil prices," he added. He also said there was a "problem of excessive tax demands on oil companies". As MosNews reported, Russia's President Vladimir Putin has called on the tax authorities to stop "terrorizing" business, but his demand has not been heeded so far and reforms, which would clip the wings of Russia's feared tax inspectors, have yet to see the light of day.