The address by the Ambassador
of the Russian Federation in Australia
H.E. Mr. A.V.Blokhin
to the participants of the
Austrade Russian Market Seminars

(19-27 February 2006, Australia)

In recent years Russia has been showing high economic growth rate.

The GDP in 2005 increased by 6,4%, the increase of industrial output was 4%, agricultural - 1,6%. The services sector, which makes up to 54% of the Russian economy, increased by 7%. The inflation rate was 10,9% in the year 2005. The GDP per capita increased more than twice since 2000 and more then three times the figures of 1999.

The amount of gold and currency reserves of the Central Bank of Russia for the first time exceeded the amount of the state foreign debt and reached 182,24 billion USD. Russia has entered the list of the five leading states of the world in this regard.

The financial stability is supported by double surplus: of the budget and current account balances. Russia has smoothly passed the peak of payments in foreign debt and does all the payments and maintaining of the debt in time and sometimes even ahead of schedule.

Changes for the better also take place in the agricultural sphere. In the year 2005 the grain output exceeded 84,3 million tons, which allows Russia to keep the position, achieved before, of an important exporter in the world grain market.

Due to the favourable situation in the world market there has been a sufficient growth of Russia's exports in 2005 - up to 222,6 billion USD. As for positive foreign trade balance, it reached 113,8 billion USD.

The cooperation in the field of investment has been developing at a satisfying pace. The two leading rating agencies - the "Moody's Investor Service" and "Fitch" - have awarded Russia with investment grade rating; in 2005 the investment rating was afforded to Russia by the international agency "Standard and Poor's". The inflow of foreign investments to Russia is stable and high and in 2005 was more them 16,7 billion USD.

Certain active measures are being undertaken in the field of reforming the national taxation system in order of making it more simple and reducing the tax burden. The combined social tax has been reduced from 35,6% to 26% since January 2005. In July 2005 the tax on inherited property was abolished.

The new Customs code came into force in 2004. It is aimed at simplifying customs administration and procedures of registration of foreign trade deals. In July 2005 the Russian Parliament passed a law "On introducing changes to the Federal law "On licensing certain economic activities" which envisages sufficient reduction of administrative barriers and gradual abolishment of licensing numerous types of economic activities.

The priority tasks in the economy for the nearest future were emphasized by President V.Putin in his speech at the State Council meeting on the 27 of December 2005.

They are:

- raising the living standards;

- reducing poverty;

- further ensuring of property rights;

- advancing the administrative reform;

- reforming of the medical and educational systems;

- innovative development of economy;

- reducing tax burden;

- developing mortgage credit system.

As for the foreign economic relations, the President stressed the importance of international transit capacity of Russia, diversification of natural resources exports, increasing the Russian industrial exports, efficiently building Russia into world economy in line with the global tendencies.

The conclusion that can be made is that the economic indicators of 2005 and a specific programme of the Russian authorities aimed at supporting market reforms and strengthening the social and economic stability obviously ensure the positions of Russia as a promising and reliable business partner of many countries, including Australia.