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G7 welcomes Russian reforms


Financial Post, Daily edition, Tuesday, April 29, 1997

World economic policy makers on Sunday welcomed Russian promises to step up economic reform, but said Moscow should change its inefficient tax system and make life easier for would-be investors.

A statement released after a regular meeting of finance ministers and central bank chiefs from the Group of Seven industrialized countries said, ``Russia is at a critical juncture in its economic transformation process.''

It added: ``Deepened structural reform to improve the environment for private investment was seen as critical for propelling Russia on to a path of sustained growth.''

The Russian economy has been shrinking stubbornly in the five years since President Boris Yeltsin launched his first economic reform program in 1992, although the latest figures indicate that the decline is finally coming to an end.

The International Monetary Fund, which is backing Russian reforms with a three-year US$10-billion loan, expects gross domestic product to grow 3% this year. A draft 1998 budget envisages growth of up to 5%.

Economic reforms are now in the hands of one-time privatization chief Anatoly Chubais, who attended part of the G7 meeting in his new capacity of finance minister and first deputy prime minister.

``The decisiveness with which Mr. Chubais wants to promote the reforms was impressive,'' German Finance Minister Theo Waigel told a news conference after the meeting.

``He promised there would soon be progress on tax reform. The G7 believes that reforms in Russia must above all concentrate on the structural problems which still exist.''

Chubais, who rejoined the government last month in a far-reaching reshuffle, has admitted that low tax revenues are among Russia's most pressing economic problems. He said Sunday that the G7 had reacted positively to Russian reforms and was backing Moscow's efforts to join the World Trade Organization and to become a member -- as a lender -- of the Paris Club of creditor states.

Russia sees WTO and Paris Club membership as signs that it is becoming a full-fledged member of the international financial community, a goal that includes transforming the Group of Seven -- Britain, Canada, France, Germany, Italy, Japan and the U.S. -- into a Group of Eight.

Source: This information is provided by the Financial Post.

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