UPDATE 1-Russian govt fails to agree anti-inflation plan

By Darya Korsunskaya

MOSCOW, Jan 31 (Reuters) - Russia's government failed to agree on urgent anti-inflationary measures at a meeting on Thursday during which the Finance Ministry rejected radical steps such as caps on foreign borrowings.

President Vladimir Putin has made fighting inflation one of his main goals during eight years in power, but it returned to double digits last year due to rising oil revenues, speculative capital inflows and large borrowings.

Consumer prices rose by 11.9 percent in 2007, exceeding the government's initial 8 percent target by a wide margin as capital inflows soared to $82 billion versus an initial forecast of just $15 billion and $42 billion in 2006.

Prime Minister Viktor Zubkov last week called on the government to find urgent measures, other than rouble appreciation, to reduce consumer price rises after the strong rouble made Russian exporters less competitive.

The issue of price rises is becoming especially sensitive as Russia will elect a new president in early March. Putin has said he could become prime minister if his preferred successor, Dmitry Medvedev, wins the poll.

On Thursday, Zubkov, a close ally of Putin, lashed out at key government ministries for their failure to find a compromise to keep inflation under control.

"As we see from a report from the Finance Ministry we have failed to hit inflation targets during the past four years," Zubkov told a weekly government meeting.

"What is this? Is this because of weak economic planning, inadequate monetary policy which cannot account for external risks, or ineffective implementation of measures and plans?