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Capital outflow to decrease from 2006-2007

MOSCOW, July 25 (RIA Novosti) - The Russian Economic Development and Trade Ministry is forecasting the decrease of capital outflow from 2006-2007, ministry representative Andrei Klepach said Monday.

He said in 2005 the forecasted capital outflow was $10 billion, while in 2006 it would be $5-7 billion.

"In 2007 we could become a pure capital importer," Klepach said.

The ministry links this optimistic forecast with the new mechanism of the private-state partnership within the investment fund.

Klepach said that as a result of the single social tax reduction, the value-added tax return and other taxation changes, business in 2006 would have substantial funds worth 1% of the GDP.

"One-third of these funds will be used to raise wages and others will be used on investments or capital outflow," he said, adding that conditions for investment growth would be created.

The ministry expects the growth of direct foreign investments by 9.8% in 2005, 11% in 2006 and 10.4% in 2007.

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