Transcript of the beginning of the meeting:

Vladimir Putin: The job is done, isn't it, Ms Matvienko?

Valentina Matvienko: Yes, that's the first piece of good news I'd like to share with you, Mr Putin. Our belt highway project is just about to be completed, and much of the road has been opened to traffic today. We now have a modern, 116 km-long track, with more than a hundred junctions and overpasses, and 26 bridges, including St Petersburg's first cable bridge.

The project has completely changed the city's infrastructure. It's a dream come true to many generations of residents. Being a large logistical hub for transport, St Petersburg has until now had about 20% of all [Russia's] export/import cargo passing through it. But thanks to the new belt road, all that huge traffic flow will now be able to get to federal highways without entering the city. That's a great relief, of course.

I'd like to thank you, Mr Putin, for having personally overseen the project. I appreciate that in 2004 you put your weight behind our amendments to the draft, which envisaged the construction of two lanes each way. And, most importantly, you provided continuous funding for it. Thanks to that, we've been able to get the project commissioned two years ahead of schedule. The road was expected to be completed in 2012, but it was already launched in 2010.

We'll complete the construction of safety infrastructure here next year. And once we open a tunnel, the full ring will become operational. Yet even today one can drive from one coast of the Gulf of Finland to the other along a high-quality, modern highway, bypassing the city. So thanks a lot from all of St Petersburg's residents. It would be hard to imagine our life without this road now.

According to figures from the Transport Ministry, the traffic load we have today was expected only by 2015, meaning that we're actually five years ahead of the predicted growth rate for motorisation. There're as many as 1.7 million cars on the city's roads by now, so the belt highway is a great help. Thanks again.

Vladimir Putin: Ms Matvienko, I remember that it was a tough decision to make. Any government has less money to spend than it would like to. There's always a host of problems to address, and all of them are important.

Indeed, I had to give a number of direct, strict instructions so that the project would be treated as a priority and financed for a few years. I'm happy that the work is almost completed by now. Of course, we need to complete the dike so that motorists can come full circle around St. Petersburg. Work on the safety infrastructure also remains to be completed.

We're well aware that new traffic routes are highly important to the city, both economically and socially. Especially in summertime. And they'll become even more important in the future. But you know, while driving along some of the (new belt road's) sections, I noticed that the quality of the pavement isn't consistent throughout. I even signalled this to the Transport Minister as we came across furrows in some sections. Why is this so?

Valentina Matvienko: Yes, you're right, Mr Putin. These are the sections that were the first to have been paved. The final, western semicircle, by contrast, was built using modern technology and high-quality materials. The first semicircle used to have even more furrows than it does now, and the Transportation Ministry and I insisted they should be eliminated and called for experts to look into the possible causes. The construction got underway in 1998, you see, and, sure enough, the quality of the first part is not high enough. So now work is underway to improve it. We're closely monitoring the process.

Vladimir Putin: I understand that this is the responsibility of the Transport Ministry, but I'd also like you personally to check up on the quality of the pavement there (including the capping and the sub-base). This should be done by all means. St Petersburg's belt road should meet all modern requirements. As for the junctions, it's true they've ended up looking really good, and modern. Driving along, it would be difficult to guess where you were.

Valentina Matvienko: At the very start, when we turned to you for help, the project did not include any junctions at all. But a belt highway that is not linked with the network of street roads cannot be regarded as such, right? It wouldn't be effective enough in this case.

Vladimir Putin: How would you assess the city's socio-economic situation now that the year is drawing to a close?

Valentina Matvienko: Let me tell you that the city's economy is steadily moving out of the recession. In the first ten months of the year, industrial output grew 109.3%. The rate may turn out a bit lower by the year's end, but what is important is that all the industrial sectors are showing a tendency toward steady growth. As far as the volume of shipped products goes, we've nearly reached 130% of last year's figure. The situation with welfare payments can be described as stable, with all the usual benefits preserved and adjusted to keep up with inflation. In August, the city's average monthly wage was estimated at 26,500 roubles, 11% higher than last year. The population's real incomes increased over this period by a little more than 105%.

Before the end of this year, we plan to commission 2.5 million square metres of new residential space, meaning that we've been able to sustain the pre-crisis rate for housing construction in spite of the general economic downturn. And we've provided a lot of support for construction companies to get through the crisis (with minimal losses).

We did a great deal in support of construction companies during the crisis. They managed to hang on and are beginning to recover, building more housing now. Many public infrastructure facilities have been constructed recently. This year we have commissioned two modern theatres that have all the latest equipment – it’s something that has been done for the first time in 40 years. This project is very important for us since culture is traditionally a critical area for our city.

In a follow-up to your directive, we finished the reconstruction of Kryukov’s Barracks and transferred a large building, some 25,000 square metres, to the Naval Museum, which will soon be relocating. I expect that the first exhibition will be opened ahead of the city’s anniversary next year.

We have built several schools and kindergartens, and will finish the construction of a large sport facility with a modern swimming pool that complies with all international standards.

We have renovated the Raukhfus children’s hospital. It was quite a sizable project. This hospital is one of the oldest in St Petersburg.

Vladimir Putin: Yes, I went there when I was a child.

Valentina Matviyenko: It was constructed over 100 years ago and hasn’t been renovated since. We are finishing the construction of an oncology centre on Pesochnaya Street. It was also a big, time-consuming project. The facilities constructed in the first phase became operational two years ago, and this year we will finish the rest. There will be an outpatient clinic and a hospital under the same roof. It’s very important for the city since many people suffer from cancer here. The hospital will be provided with the latest advanced equipment.

Vladimir Putin: As you know, the federal government supported another big project, the reconstruction of the Radiology Institute facility.

Valentina Matviyenko: Yes, this project is also critical. This institute is important not only for St Petersburg but also for the entire northwestern region and even Russia in general. It has unique equipment. The funding that the institute received provided many opportunities.

Vladimir Putin: They will receive even more.

Valentina Matviyenko: Yes, I know.

Vladimir Putin: We have far-reaching plans for this institute. I expect that everything will be carried out as planned. But the city will also need to support the institute…

Valentina Matviyenko: Yes, we’re in close contact with them. We assist by providing land and developing infrastructure. It is important that this institute has a strong tradition of academic research and top specialists. No matter how much we spend, if an institute doesn’t have the right specialists, the equipment will not be used effectively.

Vladimir Putin: You have also opened two new shopping malls, on Ligovka and Nevsky Prospect, right?

Valentina Matviyenko: Yes, I’ve just returned from the inauguration of a large shopping and entertainment centre. It has an area of 200,000 square metres. There are 10 cinemas, a bowling club, a billiards hall and 11 restaurants there. The fifth floor is entirely given to children – it accommodates modern centres for technical education. Importantly, there is a parking lot for 1,500 cars here. It is the largest parking lot in St Petersburg. This facility is very important for the city. I’m sure you know that there was a huge pit filled with water on this site for 15 years. Finally this project has been completed thanks to the support of Sberbank and Mr Gref’s personal contribution. The investor was responsible indeed.

In addition, we have finished the renovation of one neighbourhood on Nevsky Prospect. It has been in bad shape for dozens of years. Also, Stockmann constructed a new European-class shopping mall here. So we have taken care of  these two sore spots.

Vladimir Putin: I’d also like you to see to the problems of those who live in uncomfortable and obsolete housing, in apartments shared by several families. Major repairs and development of courtyard infrastructure should be top priorities for city authorities.

Valentina Matviyenko: Housing has always been one of the most acute problems in the city, and we are well aware of it. There are currently several housing programmes underway in St Petersburg. We have increased housing construction rates significantly using budget funds. We have provided veterans of the Great Patriotic War with almost 10,000 flats in the past three and a half years, relocating them from shared apartments.

This year we fulfilled our commitment to provide housing for teachers to the letter. All teachers who were on the waiting list through the assistance programme received new flats this year, which is Teacher’s Year in Russia. There are a total of 1,000 of these teachers.

We are also carrying out a programme to provide young people with affordable housing, but the programme for the relocation of shared apartments definitely requires more funds than we can afford.

Vladimir Putin: What about major repairs?

Valentina Matviyenko: We maintain close contact with the Housing and Utilities Reform Fund. Thanks to federal support, in the past two years, allotments for major repairs have totaled eight billion roubles annually. This support has been significant since it has allowed us to repair between two and three thousand houses every year.

The problem is most pressing in the city’s historical centre. There are 10,000 buildings in the residential area, of which 30% were constructed before 1917. Of those, 30% have never seen significant upgrades.

Unfortunately, the Housing and Utilities Reform Fund will have to cut allocations for this programme next year. I am aware of the budget problems, but still I would like to ask you, Mr Prime Minister, to keep funding at the same level and even increase it since housing repairs are one of our top priorities. It is a very urgent challenge for St Petersburg.

Vladimir Putin: How much have you received from the fund this year?

Valentina Matviyenko: Almost five billion roubles.

Vladimir Putin: And how much did you allocate from the city’s budget?

Valentina Matviyenko: The same amount, without which we wouldn’t have received that sum from the federal budget. Such projects are co-funded by the federal government and local authorities. In addition, the dwellers pay 5% of the sum, as the fund requires. And people do contribute. It is very important. We faced some problems in the beginning, but then people saw how this programme was being carried out and many joined it, many even asked us to get the buildings they live in involved in this programme. But unfortunately, this funding will be cut next year, according to the budget draft.

Vladimir Putin: But the fund will keep working.

Valentina Matviyenko: Yes, it is very important.

Vladimir Putin: You and I will also lay the cornerstone for the new airport terminal today.

Valentina Matviyenko: It’ll be the first beam, not just a cornerstone. The project is well underway, and I’d like to thank you for your personal support. If you hadn’t made the decision to transfer the airport to the city…, I know how strongly several ministries and agencies opposed it. They behaved like a dog in a manger – did nothing themselves but wouldn’t allow anybody else to do anything either.

Vladimir Putin: Well, a dog is man’s best friend…

Valentina Matviyenko: The city received this airport thanks to your decision. We organised a concessional auction, had to go through several difficult procedures, including a financial close. Eight international financial institutions supported this project, and the financial close was finished within a short time.

Vladimir Putin: I know how much you have done for this project. I expect that it will be carried out successfully, as everything that has been done in the city in recent years. If you see to a project personally, this project is carried through to the end. This was the case with the projects for the new production facilities that we inaugurated recently. Everything is done promptly, in high quality and using advanced technical standards. St Petersburg and the northeastern region in general do need a new airport terminal. I expect that this project will be carried out using the highest modern standards, as St Petersburg deserves.

Valentina Matviyenko: I plan to invite you to the inauguration of St Petersburg’s new airport in 2013. Regarding production facilities, you have inaugurated three this year alone. In addition, a production line for Scania lorries is launched this year. We inaugurated it a week ago. On the 30^th, we’ll inaugurate a new production complex, a tech-park, which will house eight car part suppliers for Hyundai. This project has been completed. Many new high-tech production facilities have been constructed here recently, creating new jobs, increasing tax revenues and bolstering the city’s economy.

Vladimir Putin: It’s good that you develop strong relationships with investors.

Valentina Matviyenko: Investors like St Petersburg.