He said this conclusion was based on the new law on exchange controls, which stipulates that Russian citizens will be free to conduct any capital transactions, including the acquisition of real estate, stocks and the taking out of loans, by 2007. Mr. Ulyukayev said this gave the country “a completely different investment climate”.

“I always proceed from the assumption that economic growth is based on investment growth. The better the investment climate, the better for the economic climate,” he stressed. Mr. Ulyukayev believes that the free movement of capital “is very important in this respect, but there are some risks”. In his opinion, if a macroeconomic policy is wrong, the inflow of capital can be followed by its “chaotic outflow”. But the Deputy Finance Minister hopes that by 2007, Russia will develop mechanisms to control the movement of capital “in a healthy economy” without resorting to restrictions. “We hope that we will cope with this problem over this period,” he remarked.

Mr. Ulyukayev also said there was a good chance that Fitch and Standard & Poor’s would upgrade Russia’s credit rating in 2004. “The raising of credit ratings completely changes the situation with foreign investments,” he said. According to the Deputy Finance Minister, international rating agencies have investment limits on countries, and when the rating of this or that country is raised, the investment limit is automatically reviewed. “As a result, completely different money comes into the country. The rating applies to both sovereign and corporate obligations, which immediately changes the entire situation,” Mr. Ulyukayev noted.

On the strengthening of the Russian currency, he said the ruble’s exchange rate against a basket of currencies was less than half its buying capacity. In Mr. Ulyukayev’s opinion, a country that pursues this or that exchange rate policy, has a choice – either to make its currency a bit cheaper and improve trade conditions, or to let the national currency strengthen, improving the investment climate. The improvement of the investment climate is usually connected with the reliability and stability of the national currency, according to the Deputy Finance Minister. “A combination of these factors shows that a moderate, reasonable strengthening of the ruble is not harmful, but rather beneficial to the economy. It is 5-6 percent a year, our desired growth rate,” Mr. Ulyukayev noted.

Addressing price problems, he said prices for certain products were going down. “We should realize that the problem is not in the macroeconomic policy on the exchange rate but rather in establishing fair and equal competition. Otherwise, producers will be able to use non-competitive advantages, increasing their business profits,” Mr. Ulyukayev said. “The tariff policy on the products of natural monopolies will also be very important. We believe that, over the next few years, natural monopolies should not raise their tariffs (perhaps, with the exception of the gas sector) at a rate exceeding the level of inflation. If we keep this level, we will allow companies to cut costs, and prices will fall,” the Deputy Finance Minister said.