Attraction of investments depends on macroeconomic stability - 25 September, 2002

Russian Prime Minister Mikhail Kasyanov links the prospects for attracting investments in the Russian economy with maintaining macroeconomic stability and reducing the rate of inflation.

Presenting the draft budget-2003 to the State Duma on Wednesday, he pointed out that "only by ensuring this stability, we will attract investments in the fixed capital." At the same time, the head of the cabinet of ministers pointed to the slow growth of investments. "At present, the capacities of industrial enterprises are obsolete and physically depreciated, while the reserves have been fully used", he said. Over the past eight months, capital investments in industry grew by 2.5 percent only "which is unacceptable since the funds should be renovated." Fifty percent of investments falls on the monopolies and the raw materials economic sector.

The premier also stressed that the state should not invest in competitive sectors of the economy. "The state has enough problems to pay attention to - the social sphere and infrastructure", he said.

Kasyanov regards structural reforms of the monopolies as one more important instrument of raising the profitability of the economy and attracting investments. In this issue the government hopes for the further positive collaboration with the State Duma.

The prime minister pointed out that the level of inflation this year will plummet to 14 percent, and in 2003, according to the government's forecast, it will diminish by another two-percent units". In addition, he said, the growth of gold and hard currency reserves over the last several years from 12.5 to 44.4 billion dollars "reliably guarantees the country against new financial crises." According to him, the budget-2003 will allow to preserve and ensure the further growth of the Russian economy. He sees the main task of the budget in further raising the living standards of the Russian people, in the diversification of the economy, its dynamic growth and the growth of competitiveness.

The premier stressed that beginning from 2000 the growth of the Russian economy made up 20 percent, the incomes of the population grew by one-fourth, and this at a time when the money incomes of the Russian population increased by 7.7 percent in January-August, 2002. In addition, the labour productivity in industry grew by 15 percent.