Medvedev pins hopes on $10 billion fund

30th March 2011, Comments 0 comments

President Dmitry Medvedev said Wednesday a $10 billion fund Russia is setting up should attract investments five times its size and promised state officials would leave it in several years.

The Kremlin chief wants to wean Russia's economy off its dependence on oil and gas revenues and officials are seeking to put together a fund to co-invest with top international private equity firms in other areas.

"A Russian direct investment fund should be created by mid-summer," Medvedev told a government meeting in the city of Magnitogorsk in the Urals Mountains.

"The fund's management team will face the task of securing new investments at least five times bigger than the size of the fund itself," he said.

"This is an ambitious task of course but I think that taking into account our country's size, this task is feasible," he said in televised remarks.

State-run development bank Vnesheconombank will manage the fund whose capital will be built to $10 billion from $2 billion over the next few years.

Medvedev also said that state managers would leave the fund once it is up and running.

"The state should not participate in managing such a fund and should guarantee its withdrawal from the capital of the company in around seven to eight years, or maybe a bit more," Medvedev said.

Analysts say Western investors are not rushing to invest in the country because of widespread corruption, red tape and doubts over the rule of law.

At the meeting attended by top government officials and key tycoons, Medvedev gave a bleak assessment of the current investment climate, saying he did not have too much good news to report at January's World Economic Forum in Davos.

"It was a sad address," the Kremlin chief said.

Russia is heading for presidential elections in 2012 and both Medvedev and his mentor, Prime Minister Vladimir Putin have said they may run.

Neither one has so far confirmed his intention, a fact that analysts say does not improve economic stability in Russia.

© 2011 AFP

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