Russia Should Stick to Strict Monetary and Fiscal Policies - Finance Minister

        By Andrey Ostroukh
        ST PETERSBURG--Russia should stick to its strict monetary and fiscal policies, responding against Western sanctions with long-needed domestic structural reforms, Finance Minister Anton Siluanov said Thursday.
        Russia's economy is on track to contract in the first half of 2014, dragged down by evaporated investment activity and capital flight, fueled by the Ukrainian crisis and Moscow's standoff with the West.
        "We need to do more to create more favorable conditions for investors, business in Russia... And that will be our response to the existing sanctions," Mr. Siluanov said.
        Speaking at an annual economic forum, Mr. Siluanov reiterated his position that Russia should stick to its current fiscal and monetary policies in order to avoid creating uncertainty for the economy.
        Supporters of a looser fiscal policy, in particular the economy ministry, say the rainy day funds should be tapped to provide a needed counter-cyclical flow of state investment in the absence of private input. The finance ministry says the effectiveness of fiscal stimulus is rather questionable in conditions where the economy is running close to capacity.
        Mr. Siluanov also said that neither capital controls nor higher tax burdens are planned by the government. He said that capital outflows, that exceeded $50 billion in the first quarter alone, will soon ebb and Russia may record capital inflows.
        Write to Andrey Ostroukh at andrey.ostroukh@wsj.com
        (END) Dow Jones Newswires

        May 22, 2014 04:39 ET (08:39 GMT)