Finance Minister Alexei Kudrin warns that a strengthening ruble and high inflation threatened to undermine the competitiveness of Russia's economy as the nation seeks to join the World Trade Organization.
While the ruble has fallen 3 percent against the dollar this year in nominal terms, Russia's high inflation means that in real terms the ruble has in fact appreciated by 8 percent. Meanwhile, the ruble has strengthened by 10 percent compared to the euro even before inflation is counted in - implying a much higher real appreciation.
Import volumes were increasing by 17 percent to 18 percent per year Kudrin said, noting that the strengthening ruble was hindering Russia from competing effectively with the West.
Inflation has been spurred by increased government spending, and could hit 11.5 percent this year, presidential adviser Andrei Illarionov pointed out earlier.
The government has approved spending hikes this year and next in response to bungled welfare reforms that saw free services for pensioneers, World War II veterans and other groups replaced by comparatively meager cash payments at the start of the year. The reforms brought thousands to the streets in protest, the AP reports.