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25 Mar, 2008 16:41

Russia prepared for problems on world financial markets: Medvedev

President-elect Dmitry Medvedev has outlined the main economic challenges he will face after May 7, when he will take office, in an interview with The Financial Times. Medvedev said Russia has prepared itself against emerging problems on world financial m

Medvedev said he is certain that Russia has “adequately prepared for various problems that have emerged on the world financial markets – in the U.S. and in other countries”.

“What makes us confident is that over the last eight years we have managed to create a stable macroeconomic system. Our financial reserves, our gold and currency reserves are higher than ever before. This reflects the overall state of affairs in the Russian economy. We are therefore ensured against fluctuations occurring on commodity and stock markets, but we are not closed off from complexities being experienced by the world economy,” president-elect noted.

Analysts are also optimistic that Russia can weather the turbulence of the international financial markets.

Yaroslav Lissovolik, chief strategist from Deutsche Bank, says the prudent fiscal policies that were pursued during the course of the past several years, the pre-payment of external debt, the accumulation of reserves – all of that is now going to be used to withstand the adversities, the external shocks.

“And so far so good we are seeing that in spite of this global turbulence Russia's growth rates are very much resilient and very high, compared to a lot of other emerging markets,” Lissovolik pointed out.

Dmitry Medvedev stressed that inflation remains a fairly serious problem for the Russian economy. Market experts say the government has the tools to keep inflation within reasonable limits and not stifle growth.

“It's getting the right balance between growth, between realising catch-up, between bringing to fruition all of the good things that are seen happening in the economy, but making sure it doesn't overheat, so that the cost of living for the population doesn't rise too much,” said Roger Munnings, Chairman and CEO of KPMG Russia.

Russia's next president faces a challenging situation in juggling inflation against growth, but at least Russia has a few more cards in its pack than many other economies.