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Jobless, oil dependency challenge Russia: Medvedev

(Agencies)
Updated: 2009-10-11 17:44

MOSCOW: Unemployment and dependency on energy revenues remain big obstacles for Russia as it struggles to emerge from its first recession in a decade, President Dmitry Medvedev said in a television interview aired on Sunday.

"Unemployment is the biggest problem that we must overcome," Medvedev told Channel One television.

The number of unemployed fell to an eight-month low of 8.1 percent of the work force, or 6.2 million people, in August after reaching a nine-year high of 10.2 percent in March, but Medvedev said it was too early to celebrate.

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"We will promote economic growth and we will give our manufacturing enterprises the opportunity to develop, but what's most important is to control unemployment," Medvedev said.

"This is a clear challenge for the president, the cabinet and other government authorities."

Medvedev said the rouble currency, which lost a third of its value during a "gradual devaluation" that also cost Russia a third of its gold and forex reserves, was now stable, bolstered by a higher oil price and government anti-crisis measures.

Medvedev said he saw a point of no return for the diversification of the economy when non-energy sectors of the economy stand at 30-40 percent of total revenues. But he said this could take up to 15 years.

"I think that, once a significant portion of our revenue is generated by something other than energy exports - let's say at least 30 or 40 percent - then we will already be living in a different economy and in a different country," Medvedev said.

Finance Ministry projections suggest this could happen sooner than Medvedev says. Non-energy revenues will stand at about 54 percent of Russia's 2010 budget revenues, the ministry has forecast.

Customs data showed energy exports accounted for about 40 percent of total exports in January-August 2009.

Medvedev said social spending would continue to rise in the long term regardless of how strong the recovery is going to be.

"Crises come and go. Our budget must continue to be socially oriented," he said.

"We're not a very rich country. We still have a lot of problems, and we have very high - unacceptably high - levels of poverty in this country. Therefore, crisis or no crisis, we are simply obliged to do it."

Medvedev said authorities would continue to work on reducing inflation to between 5 percent and 7 percent. He said a recent fall in the inflation rate was mostly a result of a general economic slowdown, rather than government anti-crisis measures.