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Russians believe in Ruble not Dollar
Public confidence in the national currency has been restored, Russian Prime Minister Mikhail Kasyanov said at a government meeting on Friday. According to him, personal savings rose from 3.2 percent of the GDP in 2000 to 5.8 percent of the GDP in 2003. In addition, investments increased in the banking sector, and the Central Bank’s discount rate rose to 14 percent. The ruble strengthened against the US dollar by 20 percent. All this is a sign of the de-dollarization trend in the Russian economy. The Prime Minister also spoke about the country’s overall economic development. He said many of Russia’s economic indicators had been twice as high as in industrially developed nations in 2000-2003. The GDP and industrial production grew 30 percent during this period, labor productivity increased by more than 30 percent, and fixed investment jumped by 45 percent. These figures show that “the granting of an investment-grade rating to Russia was not a coincidence,” Mr. Kasyanov stressed. He noted that the real money income of people was 50 percent of the GDP. According to the Prime Minister, it is necessary to continue the policy of economic diversification in 2004, increasing the role of manufacturing industries. In Mr. Kasyanov’s opinion, the goal of intensifying the country’s social and economic development and doubling the GDP within the next 10 years will be achieved through effective cooperation between the government and the State Duma. He said the government would keep control over the tariffs for the products of natural monopolies. Over the past four months, the rate of the rise in such tariffs had been reduced twofold, and “it is important not to loosen control”, the Prime Minister stressed. In his view, this will enable the government to keep inflation at the planned level of 10 percent in 2004. Mr. Kasyanov said the government and the Central Bank had managed to get inflation under control and keep it under 12 percent in 2003. According to him, this was achieved due to a rise in the demand for the ruble and, as a result, lower speed of money movements, and also to the reduction in the rise of natural monopoly tariffs. The Prime Minister said the government was not going to significantly increase taxes in the sphere of oil and gas production. “We will not discuss significant tax rises in this sphere in the near future,” he said. In the opinion of Mr. Kasyanov, there is no notion of royalties in Russia so far, and the level of taxation in the oil and gas production sector is the same or perhaps a bit higher than in other countries. “The government should just look how the current taxation system works in this sphere,” he added. The government would consider only that part of oil production where the price of oil exceeded $25 per barrel, Mr. Kasyanov noted. He said it would be wrong to expect that the government should “consider any terms of oil and gas production and determine taxes for each well”.
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