Russia should limit its non-energy revenue deficit to four percent of GDP and curb annual inflation growth to 3-5 percent to boost its economic development and reduce its exposure to external shocks, International Monetary Fund chief Christine Lagarde said on Tuesday.
“We have outlined two anchors. One is monetary policy related to inflation, and in our view 3-5 percent would be a good anchor to have. And in terms of fiscal policies, we think that the non-oil budget deficit will be well and good in the range of 4 percent,” Lagarde told a press conference at the end of her three-day visit to Russia.
During her stay in Moscow, Lagarde met Russian President Dmitry Medvedev and Russian government officials to discuss serious challenges facing the global economy, particularly the eurozone crisis, and how these developments could affect Russia. Her trip is the first visit by an IMF managing director to Russia in the last seven years.
“Since the onset of the global financial crisis, Russia has taken a number of actions to strengthen its economic defenses. Now it needs to take further steps to guard against potential vulnerabilities. A key priority is to strengthen the budget while oil prices are high. Other steps include a continued focus on low inflation, strengthening banking supervision, and improving the investment climate,” Lagarde said.
Russia is playing an important role in the global economy and has expressed its readiness to increase its contributions to the IMF to help Europe cope with its sovereign debt crisis, she said.
“Russia, like other BRICS countries, has indicated its willingness to reinforce the financing of the IMF. Certainly, the IMF would welcome additional funding,” she said.
“I don’t have any details about the amount or about the timing but I know that the IMF is the vehicle that is preferred by countries like Russia.”
Lagarde also said the IMF would send a mission to debt-burdened Italy to analyze the situation there and offer relief measures. She declined to comment on issues related to changes in the Italian government.
Yields on Italy’s 10-year state bonds surged to a new high on Tuesday of 6.73 percent, the highest since the introduction of the single European currency, bringing the eurozone’s third largest economy on the brink of seeking bailout funds.
Investors see seven percent as the benchmark level beyond which the cost of borrowing would be unaffordable for the Italian government and hamper its ability to refinance previous debts.
When asked whether Greece met all the conditions to get a 8 billion euro ($11 billion) tranche from the troika of its international lenders, Lagarde said the country “must provide political clarity” over its efforts to establish a national unity government.