Press Release: IMF Managing Director Rodrigo de Rato's Statement at the Conclusion of a Visit to Russia

November 18, 2004

International Monetary Fund (IMF) Managing Director Rodrigo de Rato made the following statement today in Moscow:

"I have had the privilege of meeting His Excellency President Vladimir Putin, Central Bank of Russia (CBR) Chairman Sergei Ignatiev, and several of their colleagues.

"I have exchanged views with the Russian authorities about the world economic outlook and the impact of high oil prices on the global economy. The discussions also focused on Russia's economic prospects and economic policy priorities. Russia's economic performance continues to be very strong and vulnerabilities have been much reduced. At the same time, it is clear that this favorable performance owed much to high oil prices.

"In this connection, I welcome the authorities' intentions to move ahead with their ambitious program of structural reforms. To ensure sustainable fast growth even in the absence of high oil prices, I encourage the authorities to give priority to measures aimed at diversifying the economy and improving the investment climate, including public administration, banking, utilities reform, and early WTO accession.

"We support the prudent budgetary policy pursued by the Russian authorities in recent years, in particular the saving of oil revenue windfalls. This cautious policy has prevented overheating and helped preserve competitiveness. I advised against a fiscal relaxation in the 2005 budget, given the need to slow inflationary pressures at this point. Thus, windfall oil revenues should continue to be saved fully. This would also contribute to slow real ruble appreciation and improve the policy mix, allowing monetary policy to focus on lowering inflation. Using the savings accumulated in the Oil Stabilization Fund for external debt repayment would be fully consistent with these objectives.

"I welcome recent steps to tighten bank supervision. In my discussions with the Central Bank Governor Ignatiev I urged the CBR to enforce strictly its prudential criteria to determine the eligibility of commercial banks for the permanent deposit insurance scheme, to ensure that only sound banks are accepted into it.

"We also had fruitful discussions on the progress of regional integration, and the evolving role of the IMF."


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