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KUDRIN HAS NO DOUBTS THAT RUSSIA WILL RESTORE ITS COMPETITIVE POWER

MOSCOW, May 12 (RIA Novosti) - Alexei Kudrin, Russia's acting finance minister, has positively assessed the current state of the Russian economy and its prospects on the basis of the 2003 results.

When addressing a Federation Council's session Wednesday within the framework of the so-called "government's hour", Kudrin said that positive trends in the Russian economy would remain and that Russia would restore its previous positions as a competitive and solvent country.

Speaking about economic growth rates in Russia on the basis of the 2003 results, Kudrin said that "in 2003, Russia's GDP was 79.4% of the GDP volume in the pre-reform year (1990). Within the next two to three years, we shall exceed the 1990 GDP volume. Whereas the world economy grew by 3.8% in 2003, the Russian economy surged by 7.3%. We are winning back our positions in the world economy." In Kudrin's words, Russia's economic growth over the first three months of this year equaled 8% of GDP. Kudrin recalled that Russia's economic growth over the whole year was planned at the level of 6.4% of GDP.

"Thus, we are moving towards fairly high indicators for this year. For the second year running, our trajectory is that of GDP doubling," Kudrin said.

He also added that the government intended to reduce inflation this year to 10% and achieve a rise in real incomes by more than 10%. In his words, in 2003 Russian citizens transferred more than $5 billion into roubles, "Russian citizens' trust in the rouble has grown considerably," Kudrin stated. He noted that the government expected this positive trend to continue this year.

Kudrin pointed out that Russia's solvency was not doubted because the country's gold and currency reserves ($83 billion) accounted for over 9% of the import of goods and services.

According to preliminary forecasts, by the end of 2004 the country's stabilization fund should amount to as much as 384 billion rubles (about $13 billion), Kudrin noted. He assumes, however, that in annual terms the size of the stabilization fund may be even greater, considering high oil prices. According to Kudrin, Russia's state debt now is equivalent to 31.7% of GDP, including both the external and internal debts.

Speaking about new sources for replenishing the state budget, Kudrin pointed out that after the government raised the severance tax and oil export tax starting from July 1, 2004, the federal budget would receive up to $100 million every month without any detriment to the Russian economy or oil companies.