The International Monetary Fund raised its 2010 GDP growth forecast for Russia to 4.25 percent, up from 4 percent, while maintaining its inflation outlook of 6 percent, the fund's Russia head, Paul Thomsen, said Tuesday.
"We think that for the time being, recovery will be led primarily by consumption," Thomsen told reporters, noting, however, that increased consumption was still "policy-supported" and reflected the recent 45 percent increase in pensions.
The IMF puts Russia's budget deficit this year at 5.9 percent of gross domestic product, slightly higher than the official estimate of 5.4 percent, a figure that was revised down earlier this month from 6.8 percent.
Earlier on Tuesday, Thomsen met Finance Minister Alexei Kudrin. He said it was "regrettable" that Kudrin allowed fiscal stimulus measures to expand this year, including a permanent increase in pensions to 4.5 percent of GDP.
"We had hoped the withdrawal of the fiscal stimulus would start this year, but unfortunately it did not. So there is more to do in the following years," Thomsen said.
He also warned that inflation could climb well beyond 6 percent and the ruble rapidly appreciate if the ministry did not focus on reforming public sector projects by making them financially viable.
"The very last share of this fiscal relaxation took the form of a permanent increase, so we do not think it is possible to scale back this last stimulus unless the government speeds up reforms in health care, pensions and social services."
The IMF also called for an end to constant revisions to the federal budget, a practice that it claims has taken Russia in the "wrong direction" by adding to demand during periods of rising inflation.
Russia revised its 2010 budget last month and one more revision is possible in the fall.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.