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UPDATE: IMF forecasts Russian GDP growth at 5.5% in 2005 and 5.3% in 2006


WASHINGTON, September 21 (RIA Novosti, Aleksei Berezin) - Russia's GDP will grow 5.5% in 2005 and 5.3% in 2006, the International Monetary Fund (IMF) said in its annual report on the world economic outlook in Washington Wednesday.

According to the IMF, Russian GDP growth was 7.1% in 2004.

After steady growth in 2003-2004, the real growth of GDP slowed in the Commonwealth of Independent States (CIS) in 2005. The IMF said the trend was particularly obvious in Russia and was due to political instability, the Yukos saga, and skyrocketing tax rates in the oil sector, almost 90% of the profits from oil sold at the price of $25 per barrel and higher.

IMF experts said the above factors had caused slack investment and a decline in output in the Russian oil sector.

The experts also predicted that the unexpected growth in oil prices in 2005 would increase the budget surplus, making it possible to step up structural reforms, which have been virtually stalled, except for some progress in the banking sector, where the introduction of deposit insurance has led to limited but long-awaited consolidation.

According to the experts, the main reason for unwillingness to invest in the private sector, including the oil industry, is the state's increasing control over this field.

The report also states that inflation in Russia will exceed the targeted 8% by 4%-5%.

The experts stressed the necessity to focus monetary policy on deflation, which can be achieved by keeping the exchange rate policy resilient and maintaining financial discipline.

The IMF forecasted that in the former Soviet Union real GDP growth would be as follows: in Ukraine, 5.5% in 2005 and 5.4% in 2006; in Kazakhstan, 8.8% and 7.7% respectively; in Belarus, 7.1% and 4%; in Turkmenistan, 9.6% and 6.5%; in Armenia, 8% and 6%; in Azerbaijan, 18.7% and 26.6%; in Georgia, 7.5% and 4.5%; in Kyrgyzstan, 4% and 5.5%; in Moldova, 6% and 5%; in Tajikistan, 8% and 7%; and in Uzbekistan, 3.5% and 2.5%.

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