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The Associated Press February 2, 2011, 3:21AM ET

Russia says economy grew more than expected

Russia's economy grew more than expected over the past year and the government is undertaking initiatives to accelerate growth further, the finance minister said Wednesday.

Speaking at the Russia Forum, a gathering of business leaders often described as the Russian equivalent of the World Economic Forum in Davos, Alexei Kudrin said the economy grew 4 percent in 2010, better than the anticipated 3.8 percent.

Kudrin said that growth could have been higher if Russia had not suffered the severe heat and drought last year that affected food prices and grain exports.

Russia is targeting annual growth of 7 to 8 percent in the next few years and aims to reach that goal by reducing government ownership in key sectors and by slashing bureaucracy, Kudrin said.

Kudrin said ministries have been told to cut their number of officials by 20 percent over the next three years and that they will present plans by mid-year for making their spending more efficient.

In addition, the government will sell off large parts of the stakes it now holds in companies, he said.

"We will contrinue privatization to the level of less than blocking stakes," Kudrin said. "Russia aims to be a competitive country. Whatever it takes, we'll do that."

Kudrin said Russia is likely to reduce its budget deficit this year because the budget was based on an assumed price of $75 a barrel for oil, one of the country's key exports, but that concerns about instability in the Middle East was likely to keep oil prices higher than that. On Wednesday, benchmark crude was trading near $91 a barrel in New York.

The conference comes just a week after a suicide bombing at the country's largest airport killed 36 people. The attack raised concerns about whether investors would be spooked by Russia's rising terrorism problem. It has had little effect, however, on the stock market in Moscow.

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