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WRAPUP 2-Russia officials say worst is over, not all agree

Published 04/03/2009, 10:34 AM

* Russia c.bank, FinMin say worst of crisis over

* Banking sector may avoid a second wave of crisis

* Leading researchers say economy may contract 8 pct

(Adds more on rates, c.bank interventions)

MOSCOW, April 3 (Reuters) - Russian's top finance officials sounded upbeat on Friday, heralding the end of the first phase of the crisis, but leading researchers warned the recession could be four times as deep as the government expected.

The once buoyant Russian economy faces its first recession in a decade this year as oil prices remain subdued, the global slowdown dents demand for commodities and the credit crunch makes it hard for companies to refinance debts.

But in recent weeks officials have taken heart from a stabilisation in oil prices, a recovery in domestic stock markets and some signs of bottoming out in economic data.

"We have passed the first stage and I would like, not to congratulate you probably, but to call on you to strengthen your institutions and watch carefully the risks and work with clients," Finance Minister Alexei Kudrin told bankers.

"This period (of crisis is over) but you should not relax".

Sergei Ignatyev, the head of the central bank, was also upbeat, saying banks -- which were hard hit by liquidity constraints in the second half of last year -- may avoid a second wave of the crisis, this time linked to bad loans.

"I believe the sharpest phase of the crisis is behind us. I think that as soon as in the coming months the economy will resume growing modestly," Ignatyev said at the banking event.

He was also positive on the rouble, saying the currency was very unlikely to weaken beyond the 41 mark versus the basket set as the boundary of the central bank's trading band .

The rouble strengthened as far as 38.48 versus the basket on Friday, before closing at 38.52. Dealers estimated the central bank bought around $700 million, after purchasing $170 million the previous day in a bid to slowdown rouble appreciation.

Ignatyev said Russia had bought $5 billion in February-March as part of a policy to avoid excessive currency moves.

He also said that inflation could be lower than the official forecast of 13 percent this year. Reduced price pressures would allow the central bank to cut rates to help the real economy.

"If April inflation is significantly lower than last April (when it was 1.4 percent), then possibly the board will take some kind of decision about cutting rates," he told reporters.

NOTES OF CAUTION

But not everyone shared the officials' optimism.

"At the current oil price there is every reason for such comments. But we must understand that the global crisis is still in the development stage and the rhetoric could change in case of the possible fall in the oil price to $30," said Sergei Shepilov, head of fixed income at Raiffeisen Bank.

Russia's key Urals oil export blend traded at $49.74 a barrel on Friday, nearly $9 above the level factored into this year's government budget .

Russia's leading economic researchers also sounded a note of caution, forecasting that the economy could shrink as much as 8.3 percent this year, against the 2.2 percent contraction forecast by the government [ID:nL3716292].

With the economy entering its first recession since the 1998 sovereign default and rouble collapse, Russia's state-controlled companies will be ordered to cut their bonuses for two years, Kudrin said. Russian President Dmitry Medvedev on Thursday ordered a limit on excessive bonus payments [ID:nL2967106]. (Reporting by Oksana Kobzeva, Dmitry Sergeyev, Yelena Fabrichnaya and Andrei Ostroukh, writing by Dmitry Zhdannikov and Toni Vorobyova; Editing by Andy Bruce)

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