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IMF Gives Russia Tough Love

After complimenting Russia’s strong economic growth, the International Monetary Fund got down to business in statements made today:

The IMF warned of the need to control government spending, saying it ‘would increase pressures for real rouble appreciation and make it more difficult to reduce inflation.’ While Russia seems to have ‘weathered the recent turmoil in financial markets relatively well,’ in the IMF view, ‘the key long-term challenge will be to improve Russia’s investment climate.’ Although the growth of foreign investment has been ‘impressive,’ the IMF also noted that ‘Russia still ranks poorly in international comparisons of the business climate.’

Tough stuff. Maybe the organization is still a little miffed over that whole Dominique Strauss-Kahn vs. Josef Tosovsky dispute. So far this may not exactly be the “new economic architecture” that Putin had envisioned, but that doesn’t change the fact that Russia’s Central Bank will be watched very closely on its inflation targeting with the ruble. Intervention, it seems, is not just a political addiction in Russia.