Report: Russian govt ready to guarantee inflation below 4%

ST. PETERSBURG, Jun 5 (PRIME) -- The Russian government is ready to guarantee to banks, which fear that inflation may shoot over 4% in the long term, that prices will not exceed the threshold, Economic Development Minister Maxim Oreshkin said in an interview to Business FM radio station broadcast late on June 2.

“But we trust the central bank and see that the team there is strong and able to achieve their goals. So, the government is ready to guarantee within the scheme that inflation will not exceed 4%,” he said.

This will allow banks to cap long-term interest rates, the basic rate of 7% plus a credit risk of a project that may add 2–3 percentage points to the figure, he said.

He also said in an interview to Rossiya 24 television channel that achieving a 6% economic growth is very difficult.

“What is the basis for economic growth? The number of employed people and output per  employed person, which is connected to workforce productivity and the volume of capital in the economy. If we look at the world’s average figures, we may see that per capita GDP (gross domestic product)…is lower in the world on average than in Russia,” he said.

But the demographic situation in the world is better. “This is why the achievement of the world’s average growth dynamics, which we expect at about 3% in a few coming years, will mean that our economy is in a better shape than others,” he said.

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