Transcript of the beginning of the meeting:
Vladimir Putin: We have talked in great detail today about the wildfires and help for those affected. Let us talk about the overall situation in the region, starting with its economy. What is the mood in the regional economy in this current phase of post-crisis recovery?
Oleg Kovalyov: Mr Prime Minister, the overall situation is as follows: we have taken on a heavy burden and formulated the budget to include an increase in revenues of about 17% to 18%. Looking at the past seven months, our forecasts have proved correct, so we are operating without a surplus. All in all, in comparison to the previous year we are only using those funds that were set aside for anti-crisis projects and programmes.
The industrial production growth index has been 7% in the region for these six or seven months, so we are seeing growth. It is only the construction materials industry, cement and some other industries that are still lagging. This is because the mortgage sector is not yet growing as we would like it to. The defence, oil production and processing industries are doing well, as is the food industry. Moreover, the grain company Ryazankhlebprodukt even managed to purchase a new mill during the downturn.
Naturally, the Ryazan Region still remains a subsidised region and our goal is to make it self-sufficient at least in the medium term. That's why following your instructions we are working to establish a special economic industrial zone at the town of Novomichurinsk, where there are large energy, water and natural gas reserves and a vacant area of over 300 hectares on which we could set up state-of-the-art production facilities. Fifty resident companies have expressed their interest in this zone. Ten of them are real contenders for participation in this project. We will have finished this work by late October and will submit a corresponding draft resolution to the government for approval.
Vladimir Putin: What is the average salary in your region?
Oleg Kovalyov: The average salary in the Ryazan Region is currently 14,600 roubles. There has been a slight increase but not as much as we would have wanted, as we had forecast it would reach 16,000 by the end of the year.
Vladimir Putin: What is the unemployment level?
Oleg Kovalyov: Unemployment is at 1.6%, so that is at pre-crisis levels.
Vladimir Putin: So, in a year you've returned to pre-crisis levels?
Oleg Kovalyov: We have returned to pre-crisis levels. Naturally, there are some municipal entities where the situation is more strained, for example, in Skopino, where a business has gone bankrupt. But we are working to develop small businesses and are enhancing our focus on self-employment. We are seeing improvement at the Avtoagregatny plant, which has car unit production for AvtoVAZ based here. Its products are competitive and AvtoVAZ is a happy customer. We certainly want to see it join the global car component supply system and receive corresponding licenses. It is in a good position to set up assembly lines for foreign cars. We have facilities like this and we are working on them.
Vladimir Putin: You have just said that the mortgage market is not recovering as fast as you want it to. But is it recovering?
Oleg Kovalyov: The mortgage market is recovering. We believe that as early as the beginning of next year, say in March, it will reach 2008 levels.
Vladimir Putin: What is the overall state of housing construction?
Oleg Kovalyov: We are seeing less housing being constructed this year by comparison with last year. The groundwork for new houses has been completed but developers are slow to start work on new sites because they understand that the market is still slightly frozen. At the same time I urge people to buy homes now because the mortgage terms are the same as they were in 2008 but prices are lower. People buying a home now will benefit from this.
Vladimir Putin: You have just said that developers are slow to start work on new sites. Do they have new sites?
Oleg Kovalyov: Yes, there are new sites and the groundwork has been completed on them. However, we are addressing this issue and I believe we will break this stalemate.
We are working with the banks to improve mortgage terms so that those who take out mortgages gain at least 1% or 2%.
Vladimir Putin: What is the region's average interest on mortgage loans?
Oleg Kovalyov: For example, Sberbank is offering about 12% or 13%. They also offer longer repayment terms, which means smaller monthly payments. In addition, if someone buys a flat that's ready, then they don't have to pay the initial instalment, since the flat is immediately mortgaged at the bank. This is convenient. For example, the Bratislavsky housing estate is offered on these terms. There, the uptake of mortgages increased by almost 30% in June-July against May and by 30% in July against June.
Vladimir Putin: We will soon discuss housing issues in detail. We will return to that topic separately.