Source Pravda.Ru

Presidential Councilor criticizes monetary policy draft

On August 14, 2002, the government discussed the draft of the single statemonetary policy for 2003 prepared by the Central Bank of Russia, and theforecast of economic and social development for 2003 prepared by theRussian Economy Ministry. The Cabinet was satisfied with both documents,the more so because the estimates of the Central Bank and the EconomyMinistry coincided in full.Only Presidential Councilor for the economy Andrey Illarionov foundshortcomings in them. The officials did not manage to avoid the discussionof to what extent the strengthening of the ruble was acceptable in realterms. Illarionov was again insisting that the actual ruble rate shouldnever be overestimated. The strengthening of the ruble must beproportionate to a growth of labor productivity and a decrease in theinflation rate, state expenses and the tax burden.The government and the Central Bank have long stopped objecting this. Infact, the whole budget policy of the government for 2003 is aimed atreaching these goals and even stipulated a decline in the inflation ratefrom 14 percent forecasted by the end of 2002 to 9-12 percent. However,Chairman of the Central Bank Sergey Ignatyev retorted that a certainstrengthening of the ruble in real terms was still acceptable when worldoil and gas prices were high, and the Central Bank was short of means forthe sterilization of money supply, the Kommersant newspaper reported..