#10 - JRL 7232
Rosbalt
IMF Cautions Russia Against Extremely Weakened Tax Policies

MOSCOW, June 21. 'Russia must resist the extreme weakening of fiscal policies during the reform of its tax system,' said Deputy Managing Director of the International Monetary Fund Ann Krueger in a press conference on June 20. Krueger said that on the whole she supports the course the Russian leadership has chosen and considers that it 'will allow for the distribution of economic growth from monopolized sectors of the economy to remaining sectors.' 'However, I want to caution Russia against significant weakening of fiscal politics. I think that extreme regulation and corruption are much more difficult over time for the economy than high taxes and precisely these problems must be decided at first,' said Krueger.

Krueger said that the 'key role of fiscal politics must lie in the opposition of effects of the real strengthening of the rouble in a period of high oil prices.' Krueger said in considering high oil prices that 'Russia is conducting not the most ideal fiscal politics.' She said that the unified social tax is too high in Russia. Lowering that tax rate could bring positive effects to the economy, said Krueger.

Krueger said that on the whole today Russia must reform its financial system, government bureaucracy and monopolies. She is confident that without the reforming of these sectors 'Russia can not completely realize its potential.' 'I strongly caution against the return to direct credit and subsidizing separate sectors of the economy,' she said.

Krueger also said that as a result of her visit to Russia she 'understood that the Russian government has realized that without structural reforms further development of the economy and doubling the gross domestic product is not possible.'