ST. PETERSBURG, June 9 (RIA Novosti) - A Russian deputy prime minister said Saturday the government would be able to keep inflation at no more than 8% in 2007 without having to resort to extra measures.
Alexander Zhukov, speaking at the St. Petersburg International Economic Forum, said: "I am sure we have every chance of keeping inflation within 8%."
The deputy premier said capital inflow in Russia was exerting inflationary pressure on the economy. "Funds are flowing into Russia, and this is a good thing. But this situation puts pressure on the foreign exchange market and on inflation, and it is not easy to cope with this," Zhukov said.
The chairman of the Central Bank, Sergei Ignatyev, said on June 7 that net private capital inflow in Russia exceeded $60 billion in the first five months of 2007, compared to $42 billion for 2006.
Ignatyev said auctions for the assets of bankrupt oil company Yukos, the initial public offerings by state-run retail savings bank Sberbank, and government-controlled foreign trade bank Vneshtorgbank (VTB) were the main causes of the sharp increase in capital inflow in Russia.
Inflation in Russia was 4.7% in the first five months of 2007 against 5.9% in the same period last year.
Economic Development Minister German Gref told journalists on the sidelines of the forum in Russia's second city that he saw no reasons for deviating from the government's projections for inflation and the ruble's appreciation against the dollar/euro basket in 2007, in the wake of a large net inflow of capital into Russia.
Gref said faster growth in imports could partially compensate for the situation, and that growth in money supply was also slowing considerably.
Finance Minister Alexei Kudrin told the economic forum that annual inflation in Russia would be brought down to 3% within the next decade.
The minister said the business community must feel confident that the government will be able to keep within these parameters.
Kudrin earlier said the government would be able to bring inflation down to 5.5% by 2010 and below 5% in 2011-2012.
The Russian government projects inflation at 7.0-8.0% in 2007, 6.0-7.0% in 2008, 5.5-6.5% in 2009 and 5.0-6.0% in 2010.
Last year's inflation stood at 9%, down from 10.9% in 2005, according to the national statistics service.
