Monday, May 23, 2005

The real Russian Mafia - The Taxman

The European Bank for Reconstruction and
Development has called on Russian authorities for
more government transparency and budgetary
discipline. "It is necessary to toughen
macroeconomic policies after such strong growth
in order to cope with budgetary disbalance and
decrease inflation," the bank’s statement said.

Meanwhile, the Russian government is doing
completely the opposite. All the international
observers agree that the budgetary discipline has
been slacking. Preserving investor confidence
also seems highly unlikely considering that the
taxmen have a free rein, presenting back tax
claims left and right. EBRD experts believe that
Russia will soon see massive investor flight, as
investors begin taking money out of the economy
for fear of stricter state control.

According to the data provided by the Russian
Economy Ministry, in the first quarter of 2005
alone Russian companies and banks took $19
billion out of the country. This is the highest
amount in the history of the new Russian economy.

As long as the taxman has control, the economy is