The Russian Economy

Russia has the world's largest natural gas reserves, the second largest coal reserves and the eighth largest oil reserves. It is the world's leading natural gas exporter and the second leading oil exporter. Oil, natural gas, metals, and timber account for more than 80% of Russian exports abroad. Since 2003, however, exports of natural resources started decreasing in economic importance as the internal market strengthened considerably. Despite higher energy prices, oil and gas only contribute to 5.7% of Russia's GDP and the government predicts this will drop to 3.7% by 2011. Russia is also well ahead of most other resource-rich countries in its economic development, with a long tradition of education, science, and industry. The country has more higher education graduates than any other country in Europe.

A simpler, more streamlined tax code adopted in 2001 reduced the tax burden on people, and dramatically increased state revenue. Russia has a flat personal income tax rate of 13%. This ranks it as the country with the second most attractive personal tax system for single managers in the world after the United Arab Emirates, according to a 2007 survey by investment services firm Mercer Human Resource Consulting. The federal budget has run surpluses since 2001 and ended 2007 with a surplus of 6% of GDP. Over the past several years, Russia has used oil revenues from its Stabilization Fund of the Russian Federation to prepay all Soviet-era sovereign debt to Paris Club creditors and the IMF. Oil export earnings have allowed Russia to increase its foreign reserves from $12 billion in 1999 to $597.3 billion on 1 August 2008, the third largest reserves in the world. The country has also been able to substantially reduce its formerly massive foreign debt.

Source: Wikipedia

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