#4 - JRL 7219
Flight of capital abroad stops, foreign investments rise-PM
June 11, 2003
According to the premier, "investments in fixed assets are rising four-fold this year than in 2002". Kasyanov noted that "not only mining industries" now receive foreign investments.
In 2002, the premier continued, the growth in investments was "at a very low level", totalling 20 percent. In January-April of this year, the growth in investments topped 10 percent and in April - 12.8 percent.
While in the first quarter of 2002, the outflow of capital from Russia was around one billion dollars monthly, in April 2003, Russia registered an inflow of capital to the country, Kasyanov emphasised.
At the same time, the cabinet head claimed that planned payments by Russia under foreign and domestic debts will help to raise not only the well-being of Russian citizens, but also to draw investments. "By paying debts, we tell the international community that we live in peace and give a chance to our economy to lure investments to build new enterprises," the premier explained.
Kasyanov noted at the same time that the economic growth amounted to 6.6 percent of the GDP in January-April. According to the premier's forecasts, the annual increment of the GDP will be "no lower that last year's results".
In the opinion of the cabinet head, a drop in prices on world markets for energy carriers or a sharp change in world currencies vis-A-vis the rouble "cannot undermine, in a short-term perspective, reserves of strength of the Russian economy".
Speaking of the banking system, the prime minister quoted the following data: the volume of bank deposits by physical persons climbed by 10.5 percent over the four months of the current year. Kasyanov stressed that rouble deposits were growing at outstripping rates. He claimed that this shows "confidence of Russian population in the banking system".
Speaking at the State Duma, the premier also quoted data on a real increase in incomes of population in the first quarter of this year (by 15.7 percent). Thus, incomes are rising at outstripping rates as against the rates of the country's economic growth.
He noted that economic growth averages four-five percent annually, while incomes of population rise 10-11 percent annually.
Inflation in Russia will not top 12 percent by the results of the current year, while in 2004, it will drop by ten percent. "These results offer good possibilities to be in line with planned figures". In Kasyanov's opinion, it will be possible to beat down inflation to 10 percent in 2004.
However, he noted that paid services to population rise much faster than inflation. For instance the cost of services in the housing and utility sector grows three-fold as fast as growth rates of consumer prices," the premier admitted.
He reported in this connection that the practice of setting ceiling rates of growth of tariffs for services of natural monopolies for regions would be introduced for the first time next year. The federal government will take the final decision on setting ceiling tariffs for services of natural monopolies for 2004 next August.
The prime minister suggested that deputies should prolong the current session to finalise tax legislation. Kasyanov pointed to the importance of reviewing the scheme of AVT taxes as well as restructuring the system of social insurance, which will help to cut the united social tax, starting from 2005.
The premier said that in 2004, enterprises would have at their disposal 100 billion roubles more thanks to a lower AVT. The earlier adopted decision on ditching the sales tax will need to compensate revenues which will be lost by regions. The government has already prepared proposals on this point. "I'm sure that a decision will be found in the dialogue with deputies and that it will be mutually acceptable," the premier concluded.