In a wide-ranging Kremlin news conference, Putin said he and the government were "satisfied, in general, with the results in 2005." But further progress could be made through a reduction of inflation to as little as 3-4% and carefully planned tax cuts, he indicated.
Russian GDP grew by 6.4% in 2005, the president said, exceeding the planned increase of 5.9%. The Russian stock market meanwhile surged some 88% higher over the course of the year.
The benefits of that success were filtering through to the population, Putin said, with pensions average wages growing by 9.8%, pensions by 13%, and household incomes by an average of 8.7%.
He added that country's reserves of gold and foreign currency had also grown significantly, reaching $185 billion by the end of 2005, up from just $12 billion in 2000.
That foundation would allow Russia to maintain its policy of paying off sovereign debt ahead of schedule, Putin said. Russian foreign debt totaled $86.8 billion as of October 1, 2005, according to the Finance Ministry, a reduction of some $32 billion from a year earlier.
Inflation stood at 10.9% in 2005, but Putin pointed to the government's intention to restrict it to 8%-9% in 2006. And Russia was capable of reducing inflation to as little as 3%-4% in the future, Putin said.
Putin also called for a reduction in taxes, noting that the total tax burden on the Russian economy was equivalent to some 36.8% of GDP.
But he cautioned that thorough consideration of the implications of any planned cuts was essential, and suggested that even a cut in value added tax rates - already approved this week by the government - may yet not go ahead.
Sharp cuts in any tax, including VAT, forced an increase in the money supply and were likely to hinder the fight against inflation, Putin said.
The Cabinet this week approved a VAT cut from 18% to 13%, in defiance of objections from both the Finance Ministry and the Economic Development Ministry, which have proposed a more gradual reduction to 15% by 2009.
"I do not think the discussion of this issue has been closed," Putin said.
Separately, Putin stressed that only the United States still stood in the way of Russia's accession to the World Trade Organization.
"The main problem today is the resolution of the issue with the U.S. All other countries have backed Russia's efforts to joint the WTO," Putin said.
Russia and the U.S. are currently holding talks on the issue of allowing foreign banks to open branches in Russia, the president said. But he stressed that Russia remained firmly against such a move, which he said would involve the loss of necessary state control over the sector.
"We believe it is unacceptable, as it would not allow us to control monetary flows into Russia," Putin said, adding that the U.S. financial community agreed with him.
Of the 58 members of the Working Party on Russia's accession to the WTO, Russia has yet to conclude bilateral talks with just the U.S., Australia and Colombia.
