RUSSIA-ECONOMY: Uncertainty Clouds Investment Prospects

MOSCOW, Dic 01 (IPS) - Russia hopes to bag one billion dollars each month in private foreign investment, but economic and political uncertainties cloud chances of achieving that target.

Top government reformers like first deputy prime minister Anatoli Chubais are highly optimistic about a buoyant economy acting as a magnet for western investors, particularly in the field of portfolio investment.

Chubais recently said in an interview, "even in my wildest dreams I could not have thought that an economic upturn would take place before mid-1995. But, this has already happened."

"I'm positive that by the end of this year, investments will reach one billion dollars a month and continue to grow next year," he added.

But figures from government agencies and private investors are not as rosy. Foreign investment in Russia last year amounted to nearly three billion dollars, according to the Russian state statistics committee. This year, it is expected to cross the four billion dollar mark.

Since 1990, foreign companies have pumped in 11.6 billion dollars into the Russian economy. This sum is considered to be a fraction of the country's actual potential which in some far-fetched estimates ranges till 40 billion dollars each year.

International confidence in the Russian economy varies, with 'Business Week' giving it the thumbs-up as one of the world's most attractive investment areas while 'Euromoney' magazine has ranked Russia 138 where it is preceded by Burkina Faso and Ethiopia.

Encouraging private foreign investment is one of the major goals of the draft 1995 budget drawn up by Russian prime minister Viktor Chernomyrdin. It theoretically plans macro economic stabilisation in 1995 before recovery in 1996 and major growth in 1997.

To make investment in Russia more secure and attractive, the government last September set out a programme which would provide legal guarantees as well as provide a five-year profit tax holiday, abolish customs duties on raw materials imported for joint venture collaborations and ensure that foreign firms can acquire land.

Soon after that Chernomyrdin went into political eclipse and played little part in this month's cabinet reshuffle during which president Boris Yeltsin brought in a new team of economic reform managers.

© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service