Russia to cut state role in economy

By David Schlesinger and Janet McBride

MOSCOW (Reuters) - Russia wants to reduce the state's role in the economy and will curb government spending to combat rising inflation, President Dmitry Medvedev told Reuters in an interview.

Medvedev rejected any idea of a state energy giant buying into one of Russia's biggest foreign investments, oil firm TNK-BP, half owned by BP (BP.L), and said Russia would not gamble its vast sovereign oil wealth on risky equity investments.

In a wide-ranging interview with Reuters at the Kremlin, Medvedev stressed the importance of international cooperation to solve global economic woes and repeated his proposal to make the rouble one of several regional reserve currencies, limiting the world's exposure to the dollar.

Analysts say that rising inflation, likely to hit 14 percent this year, is Russia's top economic problem. They believe the economy is growing too quickly, or overheating.

Noting that prices were rising more than twice as fast as an original government target of 5-6 percent a year, Medvedev said Russia did not have "supernatural overheating" but should act "toughly and clearly to limit these inflationary tendencies".

Asked what specific measures he would take, he mentioned the reduction of "excessive" government spending but said Russia "could not pursue interest rate policy in isolation" from international factors.

Russia manages the exchange rate of the rouble within a narrow band and is concerned that raising interest rates for the already strong national currency could encourage a flood of speculative capital into the country.

Medvedev first suggested giving the rouble a role as a reserve currency in February and he returned to the idea in the interview, saying it would help build a more robust global financial system.