| German Gref predicts unprecedentedly low annual inflation for Russia For the first time in all post-Soviet times, Russia has a real chance of reaching single-digit annual inflation rates. Yesterday, the head of the Ministry of Economic Development, German Gref, said that, judging by the projected results of the first half of the year, the growth in consumer prices in 2006 could reach 9%.
At Vladimir Putin’s traditional Monday meeting with members of the Cabinet of Ministers, Mr. Gref said that in the first half of June inflation was 0.1%, which is the lowest figure since the beginning of the year. According to him, the government expects that in June the growth in consumer prices will not exceed 0.3%, and in the six months of 2006 - 6.2-6.3% (for the same period last year it was 8%). “If this pace continues, we will reach a schedule of 9% per year,” said the head of the Ministry of Economic Development and Trade with satisfaction.
The government initially expected to reduce inflation this year to 8.5%, and this intention was reflected in the budget law. However, in the spring the forecast was adjusted to 9%. Last year, we recall, the Cabinet of Ministers also initially set the bar at 8.5%, but in the end it turned out to be 10.9%.
However, not all economists today are inclined to predict 9 percent inflation. The Troika Dialog company, for example, believes that it will be at least 9.5%. As Troika Dialog economist Anton Struchenevsky told Vremya Novostey, government spending has so far been moderate: the Ministry of Finance transferred money to budget recipients, but they did not spend it actively enough. In the first quarter, according to him, they spent only 75% of the transferred amounts, and, apparently, in April-May the picture repeated itself. “At the end of the year, budget recipients will increase spending, and inflation will rise,” Mr. Struchenevsky noted.
The main reason for low inflation rates in recent months, the economist is sure, is the resumption of economic growth in the spring, as a result of which the imbalance between domestic demand and supply has decreased. As German Gref told the head of state yesterday, in May 2006 GDP grew by 8.1% compared to May last year. “Over the five months of this year, GDP growth amounted to 6.2%, which is more than planned. If the growth rate continues, we can reach 6.4% for the year,” the minister noted.
The growth rate of industrial production is also encouraging. According to Rosstat data published yesterday, in May production increased by 10.6% compared to May 2005, which is the highest figure since November 2004 (then the growth was 12.6%). In January-May 2006 compared to January-May 2005, industrial production increased by 4.8%. “In May, the upward trend that began in March-April continued,” Andrei Klepach, director of the macroeconomic forecasting department of the Ministry of Economic Development, told Interfax. Let us remind you that at the end of the year, the Ministry of Economic Development and Trade still predicts industrial production growth at 3.9%.
Yesterday, at the meeting of the president with members of the government, the budget topic was also touched upon. The head of the Ministry of Finance, Alexei Kudrin, informed the head of state that the draft budget for 2007 will be submitted to the State Duma on August 26, as provided for by budget legislation. According to the minister, in 2007 federal budget expenditures will increase by more than 1 trillion rubles. and will amount to 5 trillion 262 billion rubles. It is planned to collect more than a trillion more income: 6 trillion 609 billion rubles. During an exchange of views on the budget topic, Vladimir Putin expressed concern that in 2007 (the year of elections to the State Duma), the process of approving the budget by deputies may encounter objective difficulties. “The budget must be adopted before the deputies leave to work in the districts, otherwise there will be no adoption of the budget, but an election campaign,” the president emphasized.
Alexei Kudrin was not taken by surprise by the president's order. He said that the budget for 2008 will be approved according to a new procedure: not in four, but in three readings, which will make it possible to adopt it in October 2007, and not in November, as usual. “It would be better even earlier,” Mr. Putin expressed his wish, and to the objection of the Minister of Finance, which was previously difficult, he explained: “I understand that it (the budget - Ed. ) must be of high quality - this is the basic financial law country, but that is why it is better to move him away from the elections.”
Prime Minister Mikhail Fradkov, who joined the conversation, assured that the government is able to prepare the 2008 budget in a short time. “We have a plan for three years, we will focus on it, there is more clarity,” Mr. Fradkov said, adding that he will set the task for ministries to make budget requests earlier than usual. And the State Duma is unlikely to be against speeding up the process of adopting the 2008 budget. Vice Speaker Vladimir Pekhtin hastened to declare yesterday that the chamber is ready to change the procedure for adopting the country's main financial document in connection with the parliamentary elections. Mikhail VOROBYEV |
|
