I guess, the 1% drop is an under-statement. Improvement is
conditional, if the government can implement it's policies.
Here is the text of the article from russiatoday.com
Elsewhere on that site: Oil-50% of Russian exports. I have already
posted that oil revenues are down 50% so far this year.
Zadornov Sees GDP Drop of up to 1%
BONN -- (Reuters) Russian Finance Minister Mikhail Zadornov (pictured) was quoted on Monday saying that his country's economy would shrink by up to 1 percent this year and at best stagnate in 1999.
Zadornov told Germany's Handelsblatt in an interview that the grim economic outlook had led the Russian government to seek additional financial help from the International Monetary Fund, which last week approved $11.2 billion in new credits.
Zadornov told the newspaper that Russia would have had no problem financing its foreign debts if economic growth had been between 3 percent and 5 percent.
But in light of current circumstances this would not have been possible without further assistance to cover the period 1999 through 2001, Zadornov told the newspaper.
IMF chief Michel Camdessus has said that Russia could expect a further $10 billion in help from 1999 through 2001 under a new Extended Fund Facility.
Zadornov said he was optimistic the pledges of international financial support would "calm the disquiet and concern of investors."
But he added that financial difficulties could only be finally overcome if the government succeeds in implementing its anti-crisis program. "If we don't manage that, then the crisis will continue," he said.
Increasing government tax revenues would be vital to bringing down interests over the coming months. "The negative dynamic has come to an end. But we are standing at a watershed," Zadornov was quoted by Handelsblatt as saying.
The Russian central bank cut its main interest rate to 60 percent from 80 percent last Friday.
Zadornov also conceded that Moscow had made a mistake by relying too much in the past on the issue of short-term treasury bills to finance its budget deficit.
He noted that the share of debt service as a proportion of budget outgoings had risen from 2 percent in the first quarter of 1994 to 33 percent now.
"The previous strategy was clearly a mistake," Zadornov said, adding that he saw a "way out" by restructuring Russian debts into longer-term instruments.
Zadornov also forecast the Russian budget deficit at between 4.5 percent and 5 percent this year, down from 6.5 percent last year, falling to 2.8 percent in 1999.
He said inflation would fall to 7 percent by December and to 5 percent next year, assuming that the government manages to stick to its economic course.
More needed to be done to tighten up government structures and make them more effective, Zadornov said, warning that the price of failure would be high.
"Either this government will succeed, or it will cease to exist," he said. ( (c) 1998 Reuters) |
