Russia's Role in G8 Seen Growing Gradually

TOKYO -- Finance Minister Alexei Kudrin said Sunday that the country's role in the Group of Eight was gradually increasing and that limitations on foreign investment, including on sovereign wealth funds, could complicate efforts to overcome the current financial crisis.

Speaking after a Group of Seven meeting in Tokyo on Saturday, Kudrin told journalists that a world economic recession would have virtually no effect on Russia's growth, Interfax reported. He also expressed hope that the Organization for Economic Cooperation and Development would upgrade Russia to a lower-risk category after world financial markets stabilized.

After talks with Japanese Finance Minister Fukushiro Nukaga on Sunday, Kudrin said the country's sovereign wealth fund was planning to buy Japanese securities, including shares and government bonds.

"We are interested in Japanese government bonds and Japanese firms' stocks," he said, adding that it would be up to experts to decide which shares the fund would buy.

"Norway has a similar fund, and we will take their experience into account when operating our fund," Kudrin said.

Late last month, the stabilization fund was split into a $125 billion Reserve Fund, which will cushion the budget from falls in international oil prices, and the National Welfare Fund, a growth-oriented, $32 billion sovereign wealth fund.

The Finance Ministry has until Oct. 1 to design an infrastructure for the National Welfare Fund's investment. Until then, money in the fund will be invested in sovereign or government-agency bonds rated not lower than AA-.

On Saturday, Kudrin attended part of the discussions at a meeting of G7 finance ministers and central bank governors, as well as a working dinner of finance ministers from the G7 and China, Indonesia, South Korea and Russia.

"Russia and Asia are somewhat distanced from the problems related to a slowdown in economic growth in the U.S. and Europe," Kudrin said, Interfax reported. He cited Russian banks' low exposure to subprime securities, saying the country "hasn't even noticed" such a problem.

"With the Central Bank's gold and foreign currency reserves and other liquidity in place, we can absolutely safely confront the possible risk of capital outflow in case the crisis grows. We are absolutely prepared for challenges," he said.

In an additional show of confidence at the meeting, Kudrin said Saturday that Russia already met the standards of the OECD's second risk group but that the financial crisis was preventing the country from being transferred to the group, Interfax reported

The OECD moved Russia from its fourth risk group to the third group -- a lower-risk division -- in January, after the country settled the bulk of commercial debts inherited from the Soviet Union.

The Finance Ministry said at that time that the country's macroeconomic performance proved that Russia was ready to be upgraded to the second group.