Eurozone problems will not affect Russia: WB economist

10:32, June 19, 2010      

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The World Bank (WB) believes that the problems some countries in the eurozone were experiencing due to their debt will unlikely affect the financial situation in Russia, said WB's lead economist for Russia Zelko Bogetic here on Friday.

"World Bank supposes the debt problems of the eurozone countries will have a limited influence on Russia," said Bogetic at the 14th International Economic Forum.

According to the economist, there are two basic reasons why the financial problems in Greece, Italy, Spain and Portugal will not affect Russia.

The first is that Russia's budget deficit and state debt have been much less than those of western Europe, so the country is relatively more immune to the volatility on the international financial markets.

The second is the volume of trade between Russia and the four countries is relatively small, said Bogetic.

Earlier this week, WB urged Russia to raise excise taxes on alcohol and tobacco in order to lessen its budget deficit and to " make Russian people happier."

Excise taxes on gasoline, tobacco and alcohol will be raised, confirmed Russian Finance Minister Alexei Kudrin on Friday. "These three types of excise taxes will be raised, this is inevitable," said Kudrin at the same forum.

However, Russian President Dmitry Medvedev one day earlier did not rule out financial assistance to those struggling European nations, while saying the European Union should bear the burden of any major "financial injections."

"Russia's prosperity, to a large extent, depends on how well things are going on the European continent," Medvedev told the Wall Street Journal in an interview ahead of his upcoming U.S. visit.

"We are not a member of the EU, but we are a European country," said the president.

The budget deficit in Russia is expected to account for 3.6 percent of Russia's Gross Domestic Product (GDP) in 2011. The deficit is also expected to decrease in the next two years and down to zero by 2015.

Source: Xinhua


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