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PUTIN OUTLINES ECONOMIC DEVELOPMENT PRIORITIES

MOSCOW, May 26 (RIA Novosti's Raisa Zubova) - The economic part of the president's state of the nation address to the Federal Assembly did not include fundamentally new tasks. But this is probably the value of Putin's recent declarations: they confirm the inviolability of Russia's economic policy, which is exceptionally important.

The essence of the main presidential address to Russia and the world is that the fundamental principles of the economic policy will not be reviewed. The concerned listener will conclude that there will be no de-privatization or re-nationalization, or the strengthening of state control of the economy.

The president believes that much has been done in the sphere of tax reforms. As a result, tax collection has grown and tax avoidance has dwindled. But this is not enough. The government is putting too much stress on its fiscal function, though it should shift its attention to the encouragement of business operation. The tax system should encourage investment. This means that the government's plans of reducing the unified social tax and value added tax will soon become reality.

The tax system should become friendlier to business. The number of tax inspections should be streamlined and accounting standards simplified, stressed the head of state. He also called on the government and parliament to draw a clear line between tax optimization and criminal tax evasion schemes.

The macroeconomic policy will remain balanced. Putin expects annual inflation to dwindle to 3% within two years (inflation is to be 10% in 2004) and thinks the ruble can become fully convertible (he set the tax in the previous state of the nation address) in two years rather than by 2007, as "the government and the Central Bank want."

Vladimir Putin thinks that Russia's natural resources can be used much more effectively, but this calls for creating a competitive atmosphere. In this connection, the head of state expects the government to quickly elaborate the Forest Code and the law on mineral resources.

The president devoted a considerable part of his address to the development of transport, saying that this is not just an economic but also a major political task for Russia, because its solution would guarantee territorial integrity and unity of the country. Consequently, stressed the president, the state will continue to control the transport infrastructure of Russia for a long time yet.

The deterioration of roads, pipelines, electricity transmission lines and ports is directly damaging the economy and hindering export. Climate and great distances are greatly increasing the outlays of Russian producers. However, Russia can turn these geographic features into a competitive advantage by providing world-class transport services to Russian producers and foreign partners.

A competitive atmosphere is the main instrument of the development of transport. Russian business is prepared to contribute to the development of the infrastructure; there are no obstacles to this, said the president. But the government must not put off the publication of its plans and projects. Much has been said about the construction of new oil pipelines and the diversification of export routes; the issue includes the expansion of the Baltic Pipeline System, the construction of the West Siberia-Barents sea oil pipeline, and the elaboration of new routes for the Russian oil bypassing the Bosphorus.

The road network must encourage the unification of industrial centers and integration with Europe, and ensure the transit of foreign cargoes, including by the North-South highway. Toll roads will become a fact of Russian life in the near future, at first by duplicating the existing congested routes.