Business News Russia - Page 29

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Stalingrad, 1942. The vast majority of the fighting in World War II took place on the Eastern Front. Nazi Germany suffered 80% to 93% of its casualties there.

revenue. Russia has a flat personal income tax rate of 13 percent. 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.

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 most of its formerly massive debts, leaving it with one of the lowest foreign debts among major economies.

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 economic development of the country though has been uneven geographically with the Moscow region contributing a disproportionately high amount of the country's GDP. Much of Russia, especially indigenous and rural communities in Siberia, lags significantly behind. Nevertheless, the middle class has grown from just 8 million persons in 2000 to 55 million persons in 2006. Over the last five years, fixed capital investments have averaged real gains greater than 10% per year and personal incomes have achieved real gains more than 12% per year.

Despite the country's strong economic performance since 1999, however, the World Bank lists several challenges facing the Russian economy including its diversification, encouraging the growth of small and medium enterprises,

building human capital and improving corporate governance. Another problem is modernisation of infrastructure, ageing and inadequate after years of being neglected; the government has said $1 trillion will be invested in development of infrastructure by 2020.

Agriculture

The total area of cultivated land in Russia was estimated as 1,237,294 km in 2005, the fourth largest in the world. Unlike most other countries, Russia has large reserves of unused arable land, in part due to the drop in agricultural production during the economy crisis of 1990s, when the area planted to grains dropped by 25%. This was accompanied by a severe decline of livestock inventories.