He said manufacturing figures and the value of Russian assets had been rather low after the 1998 default. Manufacturing growth will resume soon, but assets have returned to the pre-crisis growth level only recently. “This is a natural process, and it is exactly what the Central Bank’s monetary and credit policy was aimed at,” Mr. Vyugin stressed.

He noted that the money supply was expected to increase 42-43 percent in 2003, and inflation would be quite low. The apparent discrepancy between the rising money supply and the declining inflation rate is due to a strong demand for Russian assets. “It turned out it is profitable to invest in long-term corporate projects and obligations,” the official added.

“Contrary to the opinion of some analysts, the Central Bank has not restricted the money supply compared to the demand this year,” Mr. Vyugin said. The Central Bank’s interest rates were quite low, which led to a rise in the money supply, although the latter increased not due to the rising debt of banks to the Central Bank but to the Central Bank’s purchases of hard currency. “This policy reflects Russian economic realities,” he stressed.

According to Mr. Vyugin, the Russian economy is wide open to the outside world. Foreign trade/GDP ratio is about 45 percent in Russia, which allows for free capital movement. On the other hand, foreign projects of Russian companies make the Russian economy dependent on foreign markets.