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One problem is that economic policy is being run by free marketers and state takes a hands off approach to economic development. There are little mechanisms to spend money on targeted industries/projects.

Also there was concern that high oil prices are not going to last and budget should not include any extra oil profits as those profits are not stable.

And yet another one was inflation risk and chances of economy overheating with extra petrodollars.

And finally, oil and gas industry is private so the good chunk of the money is going to the owners as profit.

Lately the government reserves grew just beyond reasonable and it became politically impossible for free marketers to limit government spending on investing. Check this interview with Gref for some of the details:

    Opinion & analysis Interview with Economy Minister German Gref (Part 1)


So, you are also interested in the most popular question in Russia now, "How should we spend the Stabilization Fund's money?" In fact, the danger lies not in spending the state's huge savings, but in making ill-considered attempts to spend it on the country's domestic needs, thereby accelerating inflation. This is a difficult subject, because it is necessary to determine the exact ratio of monetary and non-monetary components when spending the savings. I believe that we are partially succeeding, at least judging by the gradually falling influence of the money supply on the growth of consumer prices.
by blackhawk on Tue Jul 8th, 2008 at 06:35:33 AM EST
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