Prime Minister Putin holds a meeting on drafting the federal budget for 2012 and 2013-2014


“Russia continues to see growth across all key industries. By 2012, we should fully offset the effects of the crisis. <…> We will need to adopt our first genuinely post-crisis budget and shift our focus to long-term goals.”

Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, colleagues.

Today, we will discuss the budget today. Before we begin, I’d like to ask Mr Kudrin to report on the progress of negotiations with our Belarusian colleagues regarding the provision of a loan from the Anti-Crisis Fund. It’s the EurAsEC Anti-Crisis Fund, correct?

Alexei Kudrin: Yes. Colleagues, Mr Putin, we have put together all the documents necessary to provide a loan to Belarus using the EurAsEC Anti-Crisis Fund (ACF). We agreed upon the programme with Belarus, and it provides for $3 billion over three years. In 2011, we will release $1.240 billion as requested by Belarus. The first installment in the amount of $800 million will be disbursed within a week after adopting the decision by the Anti-Crisis Fund.

Vladimir Putin: When is the deadline for that decision?

Alexei Kudrin: June 4. A meeting of the CIS ministers is scheduled for that date. After the meeting, the ministers of Russia and the other EurAsEC anti-crisis fund members will hold a meeting of the ACF Council and decide accordingly.

Vladimir Putin: And the first installment will be given within a week following that decision? 

Alexei Kudrin: Yes, the first installment will be released within a week.

Vladimir Putin: In other words, Belarus can expect to receive these $800 million on June 10–12?

Alexei Kudrin: Yes.

Vladimir Putin: The issue also had to do with the privatisation programme and the participation of Russian enterprises and businesses.

Alexei Kudrin: Yes, Mr Putin, there’s an entire package of anti-crisis policies designed to make Belarusian businesses feel more comfortable under these new circumstances, including a series of measures to help improve the business environment; on the other hand, the privatisation programme will be conducted  in order to expand the private sector in the Belarusian economy. We have a preliminary agreement that the privatisation will proceed at a pace of $2.5 billion annually. In other words, there will be $7.5 billion worth of newly privatised assets once the programme is completed. The list will be finalised for the first two years of privatisation. Both Belarusian enterprises and external enterprises can participate in the privatisation for an initial three months. In this case, we will have open terms and conditions for all kinds of investors.

Vladimir Putin: I see, thank you. Please let me know when the work has been completed.

Alexei Kudrin: I will.

Vladimir Putin: Thank you.

Colleagues, we will need to deal more aggressively, much more aggressively, with the budget preparations for 2012 and 2013-2014. We have already looked into the economic development scenarios for the next three years. These assessments and calculations will serve as the foundation for drafting the main financial document for this country over the next three years. Today, we will discuss the fundamental approaches and priorities involved in forming the federal budget.

The first thing I’d like to mention is that Russia continues to see growth across all key industries. By 2012, we should fully offset the effects of the crisis.  Previously, we promised to achieve this goal by mid- to late 2012. However, there are reasons to believe that the economy will fully recover by the end of 2011 and in early 2012. In other words, we will need to adopt our first genuinely post-crisis budget and shift our focus to long-term goals.

For your information, according to the latest numbers released by the Federal Service for State Statistics, the GDP grew by 3.5% in the first quarter of 2010 and by 4.1% in the first quarter of 2011.

We should support qualitative growth and innovative efforts and enhance the capabilities of our research and general education centres.

We should provide financing to such breakthroughs in truly pioneering spheres as nuclear power engineering, space exploration, pharmaceuticals, the medical industry, telecommunications, energy conservation, and others. Certainly, all forms of support to agriculture and farmers should also be given an undisputable priority.

Social development policies should be pursued actively. All our obligations to the people should be fulfilled, as we have said so many times. The issue also has to do with implementing large-scale educational, healthcare, and demographic relief programmes.

As we have previously agreed, the 2012 federal budget should see a significant increase in allocations to support Russian culture, museums, and libraries. I’d like to emphasise issues of defence and national security. The 2012 budget should provide for drastic increases in payments to servicemen and the implementation of a national armament programme. Let me reiterate: budget funding should invariably reach specific enterprises of this sphere in full and in due time. Please monitor these issues at all times.

To conclude, I’d like to say that when we make provisions for such major spending, it’s important to follow a stringent and responsible budget policy. We cannot stray from our course on compensating for the budget shortfall. We should strive to keep a balance of revenue and expenses. By the way, speaking of the results of the first quarter of 2011, for the first time since 2009, we achieved a federal budget surplus of 1.5% of the GDP.

I should remind you that in 2009, the federal budget deficit stood at 6% of the GDP and in 2010 at 4% of the GDP. Our initial forecast for 2011 was a deficit of 3.6% of the GDP, but we expect the actual number to be closer to 1%-1.5%. However, I’ll say it again: we have a surplus of 1%-1.5% for January-April 2011, which is not bad. We should keep these trends in mind and do our best to maintain them through our budget policies.

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