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. Last Updated: 07/27/2016

Kasyanov, Gerashchenko Agree on Inflation, Ruble

The government and Central Bank aim to sign in two weeks a new declaration on credit and monetary policy that will target lower inflation and a stable ruble rate, government officials said Friday.

Prime Minister Mikhail Kasyanov said in televised remarks at a government meeting that the International Monetary Fund backed the plans even though Russia had decided against a formal IMF loan program for this year.

"All these plans have been essentially agreed with the International Monetary Fund," Kasyanov said. "[Central Bank Chairman] Viktor Gerashchenko and I did the final work on the declaration that we put up for discussion today."

Deputy Finance Minister Sergei Shatalov told reporters the government approved the declaration and that it would be signed in about two weeks.

Prime-Tass quoted Gerashchenko as saying the 2001 policy aimed to bring inflation down and ensure a stable and predictable ruble rate if Russia's balance of payments is strong.

Gerashchenko said the declaration would outline ways to stimulate banks to investment in the real economy and the Central Bank to divest from its subsidiaries.

Both measures are instrumental for implementation of Russia's structural economic reforms, international financial organisations said.

However, the new document was "designated for internal use," unlike previous programs that were agreed with the IMF, Gerashchenko said.

He said a similar monetary policy was laid out in a midterm economic program, which the government must agree with the IMF to get a loan program before 2003.

Russia needs IMF backing to restructure its $40 billion debt to the Paris Club of creditor nations.

The IMF says approval of the mid-term program depended on the government's progress in structural reforms.

Russia has seen economic growth over the past year but it is largely due to high world oil prices and the low value of the ruble. These factors increased the competitiveness of Russian goods after the currency plunged in 1998. But economists warn the growth is slowing.

Still, the head of the European Bank for Reconstruction and Development, Jean Lemierre, said Friday he didn't think the economy was entirely driven by oil and the ruble. "On the whole, our estimates are quite optimistic," he was quoted as saying by Interfax.

The bank is increasing its planned lending this year to $700 million from $570 million last year.

(Reuters, AP)