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. Last Updated: 07/27/2016

IMF Tells Russia to Tighten Its Monetary Policy

The International Monetary Fund has called on Russia to tighten monetary policy to check inflation and keep closely to spending plans in its current budget.

A statement issued by an IMF mission late Friday in Moscow at the end of a five-day visit said the mission's main purpose was to discuss Russia's macroeconomic outlook for the rest of the year and plans for the 2002 budget.

"As to 2001, the mission was primarily concerned with modifications to policies needed to reduce inflation, which is running above what the mission considers consistent with the authorities' target for the year as a whole," it said.

"In this regard, the mission recommended some tightening of monetary policy, as well as maintaining expenditures within the limits in the 2001 budget."

President Vladimir Putin's top economic adviser, Andrei Illarionov, has said that the government will have difficulty staying within a 14 percent to 16 percent inflation forecast for 2001 — already higher than the original target of 12 percent to 14 percent.

Central Bank chairman Viktor Gerashchenko predicted this month that Prime Minister Mikhail Kasyanov's government would end up revising the target to 18 percent or more.

Analysts said Friday that slower growth of 4.9 percent in the first quarter, compared to 9 percent last year, had been expected and should lead to slow, steady growth.

The fund statement also said that the mission found proposals for the 2002 budget "to be consistent with their macroeconomic targets for next year."

Russia's representative to the IMF, Alexander Mozhin, said Friday that the visiting delegation had given the Russian economy its seal of approval. Another source said the delegation had been satisfied by the visit.

The fund's deputy head, Stanley Fischer, said during a visit this week that Russia was achieving economic normalcy.

He called for budget discipline but said that given current policies, Russia would find it easy to ask for support if needed when the country faces a foreign debt payment peak in 2003.