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Wednesday, July 12, 2006

World Bank - Russia needs more investment

07-12-2006 RBC News - Investment in the Russian economy currently stands at 18 percent of the GDP, Kristalina Georgieva, Director for the World Bank Russia program, said at an annual national business forum on Tuesday.
She said a lack of investment impeded Russia's economic growth and affected its macroeconomic stability. Georgieva put the required level of investment at 25 percent of the GDP. She defined corruption, low quality of workforce, restricted competition and problems with Russia's judicial system as the key problems faced by Russian business in 2002-2005. Georgieva also said that the part of the Stabilization Fund called the "Fund for Future Generation" should only be invested in the event of a budget deficit. It would be economically unfeasible to spend it under existing conditions, she said. Foreign direct investment in the Russian economy totaled $14 billion in the first half of 2006, Deputy Prime Minister Alexander Zhukov said on Tuesday. According to the State Statistics Service, foreign direct investment in the Russian economy in the first quarter stood at $3.845 billion, twice as much as in the same period of 2004. Total foreign investment in the first quarter amounted to $8.8 billion. Accumulated foreign investment in the Russian economy was $113.8 billion at the end of March 2006. The inflow of capital reached $18 billion in the second quarter of this year, Zhukov said. The capital inflow in the first half of the year was at a record high, he said, noting that Russia had had an outflow of capital for many years. The positive result made Russia more attractive to foreign investors, the Deputy Prime Minister stressed.

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