IMF continues to warn Russia as economy heats up.

By bne IntelliNews August 7, 2012
The IMF continues to warn Russia of spillover from global economic difficulties even as reduced vulnerabilities will help it avert a downturn similar to 2009. The IMF keeps on stressing that Russia needs tougher budget and tighter monetary policy to rein in inflation. Although inflation has stabilized in recent months, the fund's estimate of Russia's core inflation is still above the central banks 2012 target of 5-6%. Moreover, the IMF pointed out that the country's budget still "heavily dependent" on oil revenue, Odd Per Brekk, the Washington-based lender's senior representative in Moscow, told reporters last week. The main channel of contagion would be via oil prices, while strains in the euro area may spur more capital flight and squeeze financing for Russian companies, he said. The IMF noted that structural reforms are also vital to mend the country's investment climate and long-term economic growth, suggesting that Russia improve the rule of law, reduce corruption, and speed up the process of state-owned companies going private.

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