World Bank cracks down on Russian economic program

The Russian government developed certain conditions for three years of budget activities, but it has no program for the period

The World Bank has interfered in the dispute, which made the Russian government split into two feuding factions. The WB published a report about the Russian economy, in which foreign bankers repeatedly criticized the situation in the Russian industry.

According to foreign experts' opinion, Moscow must approve and start fulfilling the economic program for 2006-2008. It is the Ministry for Economic Development and Commerce that is supposed to develop the document. The program, which the ministry's head (German Gref) suggested before, did not find approval with Russian Prime Minister Mikhail Fradkov and became the reason of the long-lasting conflict with Mr. Gref.

Mikhail Fradkov stated that he needed a different program: without mentioning the reforms, which the government was not responsible for - the judicial reform or the reform of law-enforcement agencies, for instance, the Kommersant newspaper wrote. Mr. Fradkov wanted the program to strictly emphasize, which contribution every industrial branch would make in the targeted doubling of the GDP.

As a result, the Russian government developed certain conditions for three years of budget activities, but it has no program for the period. The prime minister is apparently creating the situation, in which a strategic program turns out to be pointless.

WB's chief economist in Russia, John Litwack, said that the previously registered reduction of the industrial growth had literally vanished. Bankers believe that the current situation does not have a normal explanation: the expenditure is growing in comparison with the production output; the prices on fuel are growing too.

”The decreasing growth in Russia's oil field and several other branches of industry are connected with the ongoing Yukos case and with the feeling of the state interference in the economy, WB experts think. The speed of the industrial growth will continue its reduction – it will be possible to achieve a positive change with the increase of the volume of private investments.

The growth of consuming prices made up 11.7 percent at the end of 2004 in comparison with the same period of 2003 – the index is the vestige of the growing burden that the nation's economy is experiencing.