IMF on GDP doubling in Russia

Paul Tomsen, chief of the International Monetary Fund (IMF) Russian representation, has held a press conference elaborating on an unexpectedly severe statement issued by the IMF mission in Moscow last week. Mr. Tomsen focused on the adverse effect of inflation on the Russian economy, writes VN. Inflation in Russia has run at 10% a year over the past few years. Double-digit inflation rates have only been registered in the world's poorest regions lately, according to Mr. Tomsen.

The fund has found the president-set objective of bringing inflation to 3% a year realistic. However, experts believe the Russian government and the Central Bank have to take a series of additional measures to achieve the objective. Some of these measures are rather surprising. The IMF believes the Central Bank should focus on fighting inflation and stop containing ruble growth and exchange rates. Mr. Tomsen believes it is impossible to slow ruble growth and fight inflation at the same time.

The question arises as to what the government should do about the IMF recommendation to make the country's non-primary industries more attractive for investment. Local producers are already struggling against imports, while the stronger ruble will make them totally not competitive.

The IMF approved of Russia's prime economic objective of doubling GDP. Mr. Tomsen described it as ambitious but attainable.

The IMF report is generally approving, although it contains a certain amount of criticism, writes VN. Besides, IMF recommendations are not binding. The fund has often been criticized for providing recommendations that have caused problems in the countries that followed them.