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. Last Updated: 07/27/2016

Government Plans to See 18% Growth

Gross domestic product is expected to grow 15 percent to 18 percent by the end of 2005, according to the government's midterm socioeconomic program released Monday.

To achieve this, the economy would have to expand 5 percent to 6 percent per year for the next three years.

The 117-page document approved by the Cabinet earlier this month lists dozens of reforms that need to be conducted in practically all spheres of the economy in order to achieve sustainable economic growth. The reforms are aimed at limiting the domestic economy's dependence on natural resource exports and promoting alternatives to the growth that resulted from the currency devaluation of 1998.

Among the primary tasks are administrative and military reforms, support of innovations in science and even prevention of insider trading on the stock market. The document -- although written in vague, general terms -- also calls for natural monopoly reforms, energy-saving technologies and focusing social subsidies on those in need.

Despite listing certain achievements of the last five years, such as tax reform or overall economic growth, the document stresses that the current drivers of growth -- the benefits for domestic manufacturing of the ruble's weakness after 1998 and favorable world's energy prices -- cannot serve as a basis for sustainable growth in the coming years. The ruble is getting stronger and imports are growing.

President Vladimir Putin earlier this year said the economy must double by 2010, sending many government officials in charge of the economy scrambling for a means to secure the promised economic miracle. The government's medium-term program for socioeconomic development seems to be part of the effort.

One way to promote sustainable growth, according to the document, is "to speed up diversification" of the economy. The document prescribes a range of measures but seems to lack a clear timeline for the vast, complex reforms, though it assumes they will be completed before 2008.

Economic diversification would be implemented both "horizontally," or across the board, and "vertically," in ways tailored to individual sectors.

The horizontal reforms call for securing equal access to raw materials, energy and labor. Vertical measures involve promoting private enterprises in the manufacturing, processing and service sectors.

But despite its rather ambitious scope, the document left little impression on observers.

Alexei Moiseyev, chief economist at Renaissance Capital investment bank, said the document is more or less a repeat of things previously voiced by the government and is likely primarily to reflect the Cabinet's need to appear dedicated to economic growth.

"The forecasted GDP growth is not out of the loop and is likely to coincide with reality," he said, noting, however, that to deliver Putin's promise of doubling GDP, these high growth rates will be necessary. "But if anything," he said, the document is a positive signal in that "it actually calls for structural reforms rather than pouring state money into various sectors. And that is a generally good sign."