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Investment in Russia's economy to grow $44 bln in 2007 - minister

Investment in Russia's economy will grow by $44 billion in 2007, Russia's finance minister said Tuesday.
MOSCOW, April 3 (RIA Novosti) - Investment in Russia's economy will grow by $44 billion in 2007, Russia's finance minister said Tuesday.

Alexei Kudrin said investment increased $37 billion in 2006, to $168 billion.

Speaking at a conference on economic modernization, the minister predicted investment would double in 2010, to $357 billion, against 2006.

According to the ministry's forecast, inflation will gradually decrease from 9% in 2006 to 5.6% in 2010, which the minister said would bring loan rates down and boost investment in fixed assets.

He said Russia was expected to double its domestic debt by 2010, but that foreign borrowing was not planned.

The minister said Russian borrowing from the World Bank would remain at $300-400 million for the next three or four years.

Kudrin specified that investment growth would be primarily due to the private sector.

Russia has seen a $12 billion influx in private investment since the beginning of the year, with $8 billion coming between March 17 and 23, the minister said.

Kudrin added that net capital inflow was as high as $41.6 billion last year, which he attributed to the liberalization of foreign exchange regulations.

Net capital inflow is expected to be lower this year. "We will return to $40 billion only by 2009," Kudrin said, although he did not rule out the possibility of an earlier recovery.

The minister also said that an increase in net capital inflow would cause such problems as growing money supply.

The Central Bank of Russia earlier revised its net capital inflow forecast for 2007 up to $30 billion.

"We have reviewed our net capital inflow forecast for 2007 twice this year, from $15 billion and $20 billion to $30 billion," said Alexei Ulyukayev, the first deputy chairman of the bank.

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