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. Last Updated: 07/27/2016

Business in Brief

Economic Growth in 2005

The economy probably grew 6.4 percent in 2005, higher than initially forecast by the government, Economic Development and Trade Minister German Gref said on Monday, Interfax reported.

Growth slowed from 7.2 percent in 2004. The government's initial forecast was for 5.9 percent growth, Gref said at a meeting with President Vladimir Putin and the government.

A slowdown in industrial output growth last year was due to a decline in expansion by mining companies and low manufacturing output, Gref said, according to the report. (Bloomberg)

VAT Cut by 2009

The government plans to cut the 18 percent value-added tax rate to 13 percent by 2009, under a three-year development program approved by Prime Minister Mikhail Fradkov.

The tax cut is part of proposals that aim to add half a percentage point to annual economic growth, according to a copy of the program posted on the government's web site Monday after Fradkov signed off on the plans on Jan. 19. (Bloomberg)

Unemployment Contraction

The total number of jobless people in Russia contracted by 126,000 in December from November, for a total of 5.681 million at the end of the month, the State Statistics Service said Monday, Interfax reported.

The unemployment rate inched down from 7.8 percent of the economically active population in November to 7.7 percent in December, Interfax reported. Russia calculates the jobless rate according to International Labor Organization methods, the report said. (MT)

PPI Falls in 2005

Producer price inflation fell to 13.4 percent in 2005, less than half its level in 2004, the State Statistics Service said Monday, RIA Novosti reported.

The slowdown was well in excess of that seen in the retail sector, according to the federal service's figures. Consumer price inflation dropped to 10.9 percent from 11.7 percent in the previous year, the service said earlier, RIA-Novosti reported.

The service attributed the decreases mainly to a 9.1 percent reduction in mineral extraction costs. Oil and gas production costs fell by 12.3 percent year on year, it said. Extraction costs for other resources were 0.4 percent higher, the agency said, RIA-Novosti reported. (MT)

Stability Fund Plan

The government is completing work on measures that will let it invest some of its windfall oil revenue in foreign assets to protect against inflation, Finance Minister Alexei Kudrin said.

"We have worked out the mechanism" for such investments, "and it's now being prepared" for final approval by the government, Kudrin said in an interview broadcast on NTV on Sunday. "The Finance Ministry and the Central Bank were working on this mechanism for all of 2005." (Bloomberg)

Kudrin Likes Ruble Savings

Finance Minister Alexei Kudrin advised Russians on Sunday to keep their savings in rubles, which are likely to appreciate in value because of the country's natural resource-fueled foreign currency earnings. "Today, it is a better idea to keep money in rubles. At the moment, a large amount of money is coming to Russia, so the ruble is increasing in value," he said in televised comments on Sunday.

"But there is another rule that is worth following -- don't put all your money in one place, or don't put all your eggs in one basket," the minister added. (Reuters)

Putin Vexed by Imports

President Vladimir Putin has expressed concern about soaring imports in Russia, Interfax reported Monday.

He addressed Economic Development and Trade Minister German Gref on Monday, drawing attention to the fact that imports jumped 28 percent last year. "That is too much. Among other things this is the result of the strengthening of the ruble," he said during a meeting with Cabinet members.

Gref remarked that growth in imports is good because "it reduces inflation," Interfax reported. (MT)

Bulgarian Minister Visits

SOFIA, Bulgaria -- Bulgaria's Economy and Energy Minister Rumen Ovcharov is set to visit Moscow to discuss gas giant Gazprom's request for a review of current delivery arrangements, his ministry said on Monday.

Ovcharov "will leave on Tuesday on a two-day working visit to Moscow" at the invitation of Industry and Energy Minister Viktor Khristenko, the Bulgarian ministry's press office said in a statement. (AP)

Gazprom MSCI Delay

Morgan Stanley Capital International delayed including locally traded shares of Gazprom in its Russian index until the end of May "at the earliest" until problems converting depositary receipts and local shares have been cleared up.

"MSCI has come to the conclusion that, given the practical obstacles still in place, it would be premature to consider including the local shares of Gazprom in the MSCI Russia index at this stage," the company said in a statement Friday. (Bloomberg)

TNK-BP Refinery Closure

LONDON -- TNK-BP may close down Ukraine's largest oil refinery next month on losses.

The company's Ukrainian unit will decide Tuesday whether to shut the Linos oil refinery, Irina Kovalchuk, a spokeswoman at TNK-BP Ukraine, said Monday. (Bloomberg)

Yukos Refinery Explosion

LONDON -- Yukos' Novokuibyshev refinery is repairing its primary oil-processing unit after an explosion and fire on Sunday. The company "cut refining insignificantly," a spokesman said.

One of the company's refining units in the Samara region exploded at 3:43 a.m. local time Sunday, the spokesman said by telephone from Novokuibyshevsk, where the refinery is based. "We changed our technological process, and the output of oil products won't be impacted," he said. (Bloomberg)

Norilsk Settlement

Norilsk Nickel will pay Celtic Resources Holdings to drop legal action aimed at regaining full title to a 30 percent stake in South Verkoyansk Mining, Kommersant reported on Monday.

Norilsk will pay Celtic a "substantial" sum of money, and Celtic will be left with no Russian holdings, Kommersant quoted unidentified people at both companies as saying. (Bloomberg)

U.K. Miner Buys Deposit

LONDON -- Aricom, a British company that mines in Russia, said it agreed to buy a 49 percent stake in the Bolshoi Seim titanium and iron deposit.

The company has entered into an agreement to buy the shareholding from Ural Mining, London-based Aricom said Monday. Bolshoi Seim contains an estimated 58 million tons of titanium dioxide, a mineral used to make pigments. The deposit also contains 125 million tons of iron. (Bloomberg)

MegaFon Net Profit Up

Cellular phone operator MegaFon said net income surged to $281.2 million in the first nine months of last year, 65 percent more than in the same period of 2004, Interfax reported Monday, citing the company.

The results were reported under U.S. generally accepted accounting principles, Interfax said. First-half profit in 2005 rose 85 percent to $187.5 million, from $101.6 million in the year-earlier period, the company said in October. (Bloomberg)

Nordea Seeks Bank Deal

STOCKHOLM -- Scandinavian bank Nordea is ready to sell its stake in International Moscow Bank or buy out co-owner HVB Group, CEO Lars Nordstrom was quoted Monday as saying, adding he was eyeing consolidation.

Nordea has 26 percent of the Russian bank, while HVB has 53 percent. Nordstrom said that ownership changes could come about as a result of Unicredito's takeover of HVB. (Reuters)

For the Record

Italy's Eni said it was getting less natural gas than requested from Russia for the 13th consecutive day amid freezing temperatures in Eastern Europe. Deliveries were expected to return to normal Tuesday. (Bloomberg)

Mikhailovsky GOK, the country's second-largest miner of iron ore, plans to increase production 10.5 percent this year to 9.4 million tons, from 8.5 million tons last year, Interfax reported Monday, citing Metalloinvest. (Bloomberg)

U.S. chemical giant DuPont has created a joint venture with Russkiye Kraski to supply automotive coatings in Russia, Belarus and Ukraine. (Bloomberg)