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. Last Updated: 07/27/2016

Kudrin Gets Job to Curb Inflation

The government on Thursday assigned Finance Minister Alexei Kudrin to set up a body to combat inflation as it seeks tools other than ruble appreciation to rein in price rises, which soared again in January.

The government said in a statement that Prime Minister Viktor Zubkov had asked Kudrin, the country's chief economic policymaker and advocate of prudent budget spending, "to work out effective market tools to stabilize prices."

The Cabinet will meet Jan. 31 to debate measures, which may include caps on foreign borrowings by large state firms.

The move comes as consumer prices jumped steeply in the first three weeks of January, putting new pressure on the government and the Central Bank to let the ruble appreciate -- one of only a few tools they have to fight inflation.

A government source said Thursday that the consumer price index rose 1.8 percent in the first three weeks of January, against an expectation of 1.8 percent in the whole month and compared with 1.7 percent in January last year.

State monopolies are allowed to raise prices such as gas prices or oil transportation fees in January to compensate for inflation in the previous year.

In 2007, the government missed its target of 8 percent for CPI growth as inflation accelerated to 11.9 percent.

But state companies were allowed to increase gas prices by 25 percent and oil transportation tariffs by almost 20 percent in line with the government's policy of liberalizing energy prices.

The Cabinet wants to keep inflation within 8.5 percent this year, but analysts expect double-digit growth as budget spending is also set to rise.

Kommersant reported Thursday that the government may impose caps on foreign borrowings by state firms as large fundraising was one of the key reasons behind the missed inflation target.

The country's external debt rose by 39 percent in the first nine months of 2007 to $430.9 billion, according to Kommersant. The national debt stood at only $39.6 billion, while the borrowings of state companies soared by 64 percent to $73.5 billion, mainly on the back of large fundraising by Gazprom and Rosneft.