Presented at the Bankers Association for Finance and Trades 12th Annual Conference on International

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(No Transcript)
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Anders Åslund, Senior Associate Carnegie for
International Peace, Washington, DC
RUSSIAS RECOVERY
Presented at the Bankers Association for
Finance and Trades12th Annual Conference on
International TradeGaining the Edge in a
Competitive Market In cooperation withThe
Chicago Council on Foreign Relations
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Strong Macro Picture

• Average GDP growth of 6.5 for three years 4.1
  first eight months 2002
• Current account surplus 9 of GDP 2002
• State foreign debt 40 of GDP
• International Reserves 45 billion (9 months of
  imports)

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Profound Fiscal Reforms

• Steady budget deficit of 8 of GDP became surplus
  1-2 of GDP
• Enterprise subsidies of 16 of GDP in 1998
  sharply reduced
• Barter nearly eliminated
• Arbitrary tax system reformed
• Radical tax reform flat income tax - 13 profit
  tax - 24

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Virtuous Circle

• Private ownership of land
• Judicial reform
• Enterprise deregulation
• Bank reform
• Pension reform
• Labor Code

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Putin Rides This WaveFour Key Policies

• Radical market reforms
• Rule of law
• West-oriented foreign policy
• Managed democracy

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Political Stability

• Putin 70-75 popularity rating
• Majority in both chambers of parliament
• President re-election March 2004
• Parl elections Dec 2003 no worry Direction
  clear, speed in doubt

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Remaining Problems

• Malfunctioning state
• Weak legal system
• Few small enterprises
• Energy and transportation monopolies
• Poor banking system
• Little access to Western export markets
• Minimal FDI 1.5 of GDP

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Importance of the WTO

• Offers better market access (oil industry)
• Sets reform agenda (reformers)
• Needed to solve regional trade problems
  (ignored)
• Threat to car industry, financial services,
  etc. (old Soviet managers, some new
  businessmen)
• Bureaucracy loses powers (key)

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Anders Åslund, Senior Associate Carnegie for
International Peace, Washington, DC
RUSSIAS RECOVERY
Presented at the Bankers Association for
Finance and Trades12th Annual Conference on
International TradeGaining the Edge in a
Competitive Market In cooperation withThe
Chicago Council on Foreign Relations
11
(No Transcript)