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High oil prices harm Russian economy - presidential aide

01.01.70

PARIS, April 26 (RIA Novosti) - The growth of world oil prices harms the Russian economy, a presidential aide said Wednesday.

Igor Shuvalov, on a European tour as chairman of an interagency commission on Russia's G8 membership, said current world oil prices were a serious problem for the country.

"The current oil price level is very detrimental to the economy," Shuvalov told a meeting with members of the French Association of Diplomatic Press in Paris. He said Russia, which is awash with petrodollars, was experiencing great difficulties in withdrawing surplus money from the economy.

With crude jumping to more than $70 a barrel last week, Shuvalov said annual inflation in 2006 was likely to come in at around 10% owing to the rise in oil prices. Without the increase, he suggested the rate could have been kept down to 6%.

He said households' expectations of larger government spending in the run-up to parliamentary and presidential elections in 2007 and 2008, a stronger ruble and cheaper U.S. dollar also affected the Russian economy.

Shuvalov said the economy would have been healthier and the government would have found it easier to conduct reforms with the oil price at about $30 per barrel.

"With this price, we would have been able to fulfill our social commitments to the population and keep industry developing at an expected rate," Shuvalov said.

Expert opinion

Halter Marek

02.12.06

Halter Marek
Le College de France
Olivier Giscard dEstaing

02.12.06

Olivier Giscard dEstaing
COPAM, France
Mika Ohbayashi

02.12.06

Mika Ohbayashi
Institute for Sustainable Energy Poliy
Bill Pace

02.12.06

Bill Pace
World Federalist Movement - Institute for Global Policy
Peter I. Hajnal

01.12.06

Peter I. Hajnal
Toronto University, G8 Research Group