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Russian finance minister hopes structural reform will boost economic growth

Moscow, 2 June: The implementation of the Russian government-proposed structural reforms will help accelerate economic growth in the medium term, Finance Minister Aleksey Kudrin said. He was speaking at a conference today, arranged by the investment company Renaissance Capital.

Prime-TASS quotes Kudrin as saying a reform in the sphere of currency control, control of natural monopolies and administration would furnish the basis for achieving higher economic growth rates. This is also the aim of the adjusted programme for social and economic development in the medium term.

"The combination of these measures will enable us to achieve the expected growth rates by the end of this decade in keeping with the objectives identified in the presidential message. In his state of the nation address to the Federal Assembly President Putin set the task of doubling the GDP by 2010 as compared with that in 2000.

Kudrin said this year's economic growth rates might well rise above the expected targets.

"The country's performance in January-May looks good enough. It indicates that this year's basic macroeconomic parameters may prove higher than expected, in particular, the GDP growth rates," Kudrin said.

Earlier, the Ministry of Economic Development and Trade forecast this year's GDP growth might reach 5 per cent.

At the same time Kudrin said some of Russia's budget expenses will grow next year by R107.6bn.

Spending on national defence and law enforcement will be up by R65bn, on education by R19bn, on the health service by R10bn, on the judicial system by R7.6bn, and on fundamental research by 6bn.

As of 2005 Russia may reduce the unified social tax rate to 26 per cent and introduce a unified value added tax rate of 16 per cent, Prime-TASS quotes Kudrin as saying.

Non-interest federal budget spending in 2004 will go down to 12.4 per cent of the GDP, and in 2005 it will sink below 12 per cent of the GDP.

Kudrin told the conference the sales tax must be cancelled as of 2004.

"We must be consistent in our decisions and cancel the sales tax as of 2004. Simultaneous existence of the value added tax and the sales tax is groundless."

Kudrin recalled that the sales tax did not exist in some constituent territories of Russia at all. The base of this tax has been shrinking and there are other drawbacks.

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