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Russian deputy prime minister said Thursday the country would maintain current economic policy after 2008
A Russian deputy prime minister said Thursday the country would maintain current economic policy after 2008, when President Vladimir Putin's term of office expires. Alexander Zhukov also told a conference organized by banking and financial services group UBS that the Stabilization Fund would more than double next year in comparison to today's figure and suggested the government should continue efforts to repay its external debt. Putin is credited in his country for establishing relative political and economic stability after a decade of post-Soviet turmoil and dubious privatization deals, which made a handful of "oligarchs" rich but impoverished millions of Russians. And the deputy prime minister sought to ease concerns that the president's departure from office could trigger new difficulties as the Russian economy, which is still plagued by problems. "I believe the current line will be continued in the next two years and after 2008," he said. Putin himself has consistently resisted calls to amend the constitution to enable him to run for a third consecutive presidential term. Zhukov also said the government would continue its balanced and cautious budget and economic policy using high oil prices to resolve domestic problems and also working to promote economic growth. The deputy prime minister also said the Stabilization Fund, set up to accumulate windfall oil revenues in 2004, would exceed more than double from its current level of around $65 billion to $150 million in 2007 and, domestic and external debt would decline to less than 10% of GDP. A total of 45% of Stabilization Fund money has been placed in the Federal Treasury's accounts in Russia's Central Bank in U.S. dollars, 45% in euros and 10% in British pounds sterling. Other options could be determined this fall. Zhukov was also upbeat about the country's already massive gold and international reserves. The Central Bank said as of September Russia had the world's fourth largest currency reserves after China, Japan and Taiwan at $260.4 billion. "Even if oil prices drop in 2007-2009, Russia's gold and currency reserves will continue growing and exceed $300 billion," the deputy prime minister said, echoing comments made by Economic Development and Trade Minister German Gref on September 11. Zhukov said the government was seeking to pay off as many liabilities as possible by taking advantage of the massive gold and currency reserves. Various spending and investment options for oil receipts had been debated in the government, which has been cautious to invest funds in domestic projects in fear of spurring inflation. Finance Minister Alexei Kudrin has led a campaign to use profits from oil exports to clear its foreign debt and Russia fully repaid its debt to the Paris Club of Creditor Nations, worth $23.7 billion, ahead of schedule August 18-21. Zhukov said paying the remaining foreign debt was "the most effective way of spending part of the country's excessive foreign currency receipts." Russia's budget and tax policy for 2007 targets to bring foreign debt from 9% of GDP as of late 2006 to 8.3% in late 2007, and to 7.5% in late 2009. Internal debt is expected to exceed foreign liabilities as early as in 2008.
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