New Economic Growth Model For Russia?

June 29, 2011Marketsby EW News Desk Team


The Russian economy needs a new growth model for economic development, said Russian President Dmitry Medvedev in his budgetary address on Wednesday.

Addressing budgetary matters for the next three years, Medvedev outlined 12 key priorities that would raise the efficiency of state governance, modernise the economy and improve living standards in the country.

According to Medvedev, "growth in 2010 stabilized at around 4 percent. We expect roughly the same rate this year, maybe a bit higher. We have been able to significantly reduce the federal budget deficit. And, most importantly, we have fulfilled all of the government’s social obligations. The key tasks for our fiscal policy are the modernization of our country and its economy, and creating an environment that improves its competitiveness and its stable long-term development.”

One of Medvedev’s key priorities include reducing the role of the government in the economy through privatization, an overhaul of the state purchase system and the expansion of state and private partnership.

Medvedev ordered the government to prepare for the sale of its controlling stakes in some key state companies, while calling for the cabinet to prepare a schedule for the sales.

"The role of the state in direct governance of economic assets must be considerably reduced," Medvedev said. "The Russian government needs to prepare a schedule for the privatization of large share packages in key state-controlled companies to reduce the state's stakes below a controlling interest or give up state participation, except for infrastructure companies or companies related to the provision of state security."

Earlier in the week, Russian Finance Minister Alexei Kudrin announced plans to sell the government’s controlling stakes in Rosneft (oil company) and Aeroflot (national carrier), along with its stakes in other Russian companies and banks. Kudrin predicted that the selloff would yield about US$30 billion over the next three years.

Apart from privatising state owned companies, Russia is also aiming to decentralise the current power base from federal to regional to municipal governments.

Medvedev called for proposals to be submitted by December 1st this year and has announced plans to set up a working group to discuss the decentralisation process.

The Russian Finance Minister Kudrin added that the President’s measures must be implemented within the next three years in order to facilitate economic development in the country.

"They concern major strategic, fundamental issues and current middle-term tasks for the next three years. Strategic planning is the key one here and everything should start here, so that government funds are matched to these goals. These should always be balanced tasks with a resource backing and we still have a lot to do here."

Story from Ria Novosti 

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