Russia ploughs ahead with transport boost

Government spending on transport will soon overtake defence outlays in Russia, but analysts claim that’s not enough to drive further economic growth.

It’s thought underinvestment in roads and ports infrastructure is shaving 3% off Russia’s growth every year.

At the Transport Ministry congress setting out spending to 2010, First Deputy Prime Minister Sergey Ivanov vowed to change that.

“From now a massive 4.8% of GDP annually will go on transport infrastructure, that’s more than Russia spends on defence. Only half will come from the government, the rest from private investors,” Ivanov said.

Russia’s Transport Minister claimed conditions were now ideal for foreign investment.

“We do not need tax breaks for foreign investors. Our legal framework is already as good as in the West. We are organising road shows, round tables, conferences abroad to show they can make money from building our toll roads and railways, something the likes of Vinchi and Siemens are already doing,” Igor Levitin, Transport Minister, said.

Experts say the government’s transport spending may sound a lot, but it doesn’t stack up against foreign standards.

“It is very little. 3 to 5% of GDP goes on transport in the West, where most infrastructure is already built and they just need maintenance. Russia has a lot of building to do,” Eduard Faritov, transport analyst of Renaissance Capital, explained.

Ivanov ordered the Ministry to submit its detailed transport programme to Parliament by May 1st.