#5 - RW 274
Russian growth on the up in 2003, more reform needed: IMF
September 18, 2003
AFP

Higher oil prices and wages will push Russia towards stronger growth in 2003, but Moscow and other ex-Soviet governments must take steps to improve their "inhospitable" investment climates, the International Monetary Fund (IMF) said on Thursday.

The IMF warned that the boost to Russia's economy from the rise in oil prices and wages in unlikely to last in the long term, increasing the pressure on the country's rulers to push through much needed structural reforms.

In its twice yearly World Economic Outlook published here, the IMF forecast that Russia's growth will rise to 6.0 percent this year from 4.3 percent the year earlier, but should drop back to 5.0 percent in 2004.

It said part of the activity was due to strong growth in private consumption, prompted by hikes in wages and pensions.

"In contrast, however, investment activity outside the energy sector has remained subdued ... reflecting the continued inhospitable investment climate," it said.

"Regional growth prospects depend critically on an acceleration of structural reforms," it added.

The IMF said that Russia must reinforce reforms in its banking sector and open its electricity and transportation sectors to outside competition.

It said progress towards reform in most countries in the region has slowed "markedly", with particular work needed in areas affecting private sector development.

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