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. Last Updated: 07/27/2016

Russia to Chart Own Economic Path




Russia basked in new-found economic strength Tuesday as officials questioned the purpose of an arriving International Monetary Fund team and made clear they would chart their own economic course this year.


Gross domestic product grew 1.5 percent in the first nine months of last year, after a 3.3 percent fall in the same period of 1998, paving the way for only the second annual growth in a decade.


The Russian Statistics Agency, citing preliminary data, said 1999 GDP grew 3.2 percent after a 1998 fall of 4.6 percent.


The rosy picture was also reflected in a swelling trade surplus, up to $3.8 billion in November from $3.2 billion in October, a good sign for the government, which is scrambling to pay foreign debts and help finance a costly war in rebel Chechnya.


Exporters and government coffers have both benefited from higher global energy and metals prices, while the 1998 ruble devaluation has priced imports out of the local market, giving domestic producers an opportunity to ramp up production.


Russia has met most economic targets in its IMF program, and the government - saying structural reform pledges were ambitious - plans to rewrite its economic plan, Deputy Prime Minister Viktor Khristenko told Segodnya newspaper.


Economists say Russia cannot improve much more without structural reforms and they are uncertain what acting President Vladimir Putin plans to do if elected to the post March 26.


Putin has promised reforms and a stronger state, but he has not offered details. Standard & Poor's rating agency projected 1999 growth would top out at 1.9 percent, but said investment had barely increased.


"Growth cannot be sustained unless weak institutional and legal infrastructures are strengthened to create a better climate for investment," it said in a statement.


Khristenko said Russia was writing an economic strategy and would review it with the IMF in April.


The IMF, relied on by the West to persuade Russia of the value of reforms, has refused to release loan tranches, already factored into the budget, since last September, saying structural reform obligations have not been implemented.


Central Bank chairman Viktor Gerashchenko said it was unrealistic to count on the IMF to give money this quarter and that Central Bank reserves could meet demand.


Russia is counting on Western credits to cover $6 billion of the country's $27 billion 2000 budget.


"If prices remain the same, if trade and political barriers are not erected around us, then I think that in theory we will pull ourselves together and get through 2000," Gerashchenko said.