18 Sep 2009 13:10

High inflation remains unresolved in Russia

SOCHI. Sept 18 (Interfax) - The Russian government ha snot yet managed to cope with high inflation, Russian Prime Minister Vladimir Putin said at the investment forum in Sochi.

"All countries have their problems. Russia's problem is high inflation, which we, regrettably, have still not been able to deal with as necessary," he said.

Inflation was also the Russian economy's Achilles Heal from the point of view of our approach to the crisis, he said.

"We had a huge inflow of capital in previous years - $81 billion in 2007 - plus petrodollars, and the Central Bank, with all due respect, was unable to cope entirely with the task of sterilizing surplus money supply," Putin said.

"The government was also unable to resist the temptation to spend big. This was fairly hard to do for political reasons. The pressure was on when there was a lot of money and a lot of things had to be tackled like developing infrastructure and the social sphere," Putin said.

These factors fuelled inflation when the crisis had already dug in, Putin said.