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Western investors changed their attitude to Russia

October 15, 2012, 13:51 UTC+3

The overwhelming majority of those polled at the request of the World Economic Forum stated that the country is on the right path of development

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Russian Prime Minister Dmitry Medvedev held a working visiting session of the World Economic Forum, which was devoted to the theme “Russia in the world context”. At the session Western investors stated that the country is on the right path of development, but they noted the oil prices, which will go down, and a weak budget structure among the risks.

Western investors have changed their attitude to Russia, the RBC daily reported. The overwhelming majority of those polled at the request of the World Economic Forum stated that the country is on the right path of development. However, all businesspeople and experts, which came to Moscow, noted among the risks the oil prices, which will go down, the establishment of the state-run corporations, which can replace the structure of power, and a weak budget structure. Former Finance Minister and head of the International Expert Council in Russia Alexei Kudrin criticized a weak budget structure most of all.

Positive responses about the investment climate were voiced on Sunday nearly for the first time among the claims made to the Russian economy and the authorities for a long time. Noting the notorious problems with the trust to the courts and the lack of clear rules of the game, Chairperson of the VimpelCom Board and co-founder Augie Fabela stated that if Russia remains a responsible oil supplier, the country can acquire “the role of leader in the global context.”

Noting the oil dependence of Russia and the need “to diversify the economy” and “to create an economic system of small and medium business” for the purpose, Abraaj Capital CEO Arif Naqvi noted that the country underwent “many positive changes.”

Ernst & Young CEO James Turley finalized a positive scenario. The expert recalled that several years ago Russia has formed a committee headed by First Deputy Prime Minister Igor Shuvalov. The committee worked with major investors in the manual mode. The survey showed that the investors began to give more positive forecasts for the prospects of investments in Russia since 2007. Over 70% of investors said that the country is on the right path of development. “The most important positive factor became the growth of wellbeing and the growth of the middle class in Russia,” he stated. Over 70% of investors named bureaucracy among the challenges and 67% of them named corruption.

Alexei Kudrin noted that the participants in the meeting criticized strongly the state authorities and set concrete tasks for the government, the RBC daily reported. “The fact that the investors gave a very positive assessment to the prospects of Russian economy is explained by the fact that the businesspeople are always a little more complimentary, because they are implementing quite major projects in our country,” he said with a smile.

The Nezavisimaya Gazeta daily recalled that the then Prime Minister Vladimir Putin set the priorities for the Russian authorities to members of the Advisory Council on foreign investments in economy a year ago. The top priority is to ensure macroeconomic stability through a responsible budget and financial policy. The second priority is the struggle against inflation and the targeting of inflation. Meanwhile, the state authorities pledged to restrict the appetites of the infrastructure monopolies “to curb the inflation in order not to accelerate the inflation” since 2012. Another priority is a well-balanced, cautious policy on borrowings. Meanwhile, Putin said that within next ten years the share of the domestic innovative product will increase from 12% to 25-35% in the total volume of production, and the labour productivity will grow. However, not all Putin’s pledges have been fulfilled by October 2012. For instance, the gas tariffs for Russian citizens increased by 10.4% this year and by 5.6-6% for electric supplies and by 12% for heating supplies. The inflation, which showed a slow growth before the middle of last summer, went up sharply.




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