Inflation in Russia could reach 14% in 2009 due to increased borrowing from its reserve funds to cover the budget deficit, the finance minister said on Saturday.
“We are expecting inflation [in Russia] to reach 13%-14% due to a more extensive use of reserve funds to cover the  budget deficit,” Alexei Kudrin, who is attending a G7 meeting of finance ministers in Rome, said in an interview with Russia’s Rossiya television.
“We must curb inflation, although it is difficult, but we will keep trying. Anti-crisis measures are being successfully implemented…and the accumulated reserves have already brought positive results,” the minister said.
He added that the government would increase borrowing in the next two years to partially cover the budget deficit, but would not cut the spending for social programs approved for 2009.
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Kudrin said the Economic Development Ministry had prepared an adjusted forecast of Russia’s economic development for 2009, which would be reviewed at a government meeting in two-three weeks along with an adjusted budget proposal.
- A d v e r t i s e m e n t
Russia’s economy grew 8.1% in 2007 and the government expected GDP to grow 7.8% in 2008 but had to lower its forecast to 5.6% due to the global financial crisis.
The minister earlier said Russia’s GDP growth will be close to zero and budgetary revenues could decline 40% in 2009 amid the economic crisis.
Arkady Dvorkovich, the top Kremlin economic aide, said on February 11 that Russia’s budget deficit could reach 10% of the country’s GDP in 2009.