Prime Minister Vladimir Putin visited United Russia Party’s Public Reception Office
Sergei Shchapov: Good afternoon, my name is Sergei Shchapov. I've had my own business since 1992. I make furniture. My bank has always been accommodating in terms of issuing loans. Naturally, I was able to plan my activities, sign contracts with suppliers, but now I have problems meeting my contractual obligations because banks do not issue loans, and my own resources are not sufficient. How can this situation be resolved?
And the second question. It has become difficult to pay taxes, especially VAT, on time. Is the Government aware of this situation? Are there any measures being planned to support small business?
Vladimir Putin: I've just visited a bank. We'll ask the head of the bank to meet with us here so we will be able to talk with him.
Sergei Shchapov: Not all banks issue loans.
Vladimir Putin: That is true. Some small banks did not issue loans in the past either.
Regarding small business. The Government has been allocating some resources, but the amounts were not large. The budget this year earmarks 3.4 billion roubles. Those funds will be disbursed of course; they will go to the bank. These are target budget disbursements in support of small and medium-sized enterprises, like yours. I'll tell you in a moment what we are going to do with that money.
On the whole, there are certain problems caused by developments in global financial markets, and our banks have also been affected. I am sure you are aware that we have adopted a series of measures to ensure liquidity, that is, the possibility for the bank to work with companies and individuals. I am not going to recap the whole package of measures. I am sure that you know all about them, having been in business for years.
The main thing is to secure the so-called "long" money. Together with the Central Bank, we have decided to reduce minimal bank reserves. That will releases some resources. We have passed a law that allows the Central Bank to hold auctions and make deposits with commercial banks without a collateral. The CB held the first such auction on Monday.
I have just visited a commercial bank here and made sure that the money has reached it. The Central Bank deposited a total of 700 billion roubles, of which less that 400 billion have been claimed; in other words, the banks avail themselves of this money, but by and large they haven't even used up the amounts made available to them.
However, the most important thing is to secure the so-called "long" money, something that, frankly, did not exist in our economy previously. Many businesses used the loans from Western financial institutions, which are now closing these credit lines because of the problems that have arisen in the West. So, it has been decided to issue 950 billion roubles to banks in so-called subordinated loans, of which 500 billion will go to Sberbank and the rest to several pivotal banks.
From there the money will go to regional commercial banks directly or through their regional branches. I am confident that the money will reach the Novosibirsk Region as well.
Now as regards direct government support for small and medium-sized businesses. As I said, we have earmarked 3.4 billion roubles for this year. The Government is discussing the possibility of increasing that figure several-fold. I am not going to mention the final figure, but we are talking about an increase by several times. Much of that money will most likely be channeled through the Sberbank system, because it has a large network of branches across the country and it will be easier to work through it. Loans for agriculture will go through Rosselkhozbank, which also has a fairly large network of branches. This is the outlook.
As regards VAT, this year we changed the payment system and introduced lump quarterly payments. It was convenient for banks and not very convenient for businesses. In the light of the current situation in the financial sphere that decision has been reversed. Now VAT payments can be spread out and be made in equal installments throughout the quarter. I think that is more convenient.
Sergei Shchapov: Thank you. So, the outlook is good? No reason to worry?
Vladimir Putin: It always pays to keep on your toes. But I have no doubt that we will successfully tackle the current problems which, let's face it, small business has always had. I'll talk to another visitor now before we are joined by the head of the bank. Has he arrived? Not yet? Could you wait a little and then come back here? We'll put your question to him.
Sergei Shchapov: All right. Thank you.
Vladimir Putin: What's your name?
Artyom Kutsenko: My name is Artyom Kutsenko. I am a student at the Novosibirsk Law Institute, which is a branch of Tomsk State University.
Vladimir Putin: What year are you in?
Artyom Kutsenko: Second year.
Vladimir Putin: Have you already chosen your major?
Artyom Kutsenko: Not yet, specialisation starts from third year.
Vladimir Putin: Which subjects do you like most?
Artyom Kutsenko: I like public law and business law.
Vladimir Putin: What are your options for specialisation? What will your degree be in?
Artyom Kutsenko: It will be in jurisprudence.
Vladimir Putin: Will your graduation paper be devoted to jurisprudence?
Artyom Kutsenko: It will be devoted to general issues.
Vladimir Putin: No, I mean your diploma as a piece of research.
Artyom Kutsenko: I'll have to choose the topic later.
Vladimir Putin: What is your question?
Artyom Kutsenko: Mr Putin, as a student, group monitor and chairman of the student council I am aware that students are very interested in the question of student loans. Everybody knows that we are in the middle of a banking crisis. Will students be able to get their loans next year and what are the chances that these loans will no longer be available?
Vladimir Putin: First of all, as you know, global financial markets are indeed experiencing problems. It is a full-blown crisis, by any definition. In this country, fortunately, although we are also having problems, there is no crisis. I hope it won't happen. The Government and the Central Bank are taking measures to prevent it.
However, a great deal has to be done to get us through this period. Still I hope that we will achieve many of our goals. As for your question, we created the system of student loans as early as 2006. But at the time this plan was not carried out. The money allocated is only beginning to work now. I don't remember the exact figures, but I think this year we allocated 63 million roubles. Next year, in 2009 and in 2010 it will be over 120 million.
Three types of loans are available. The principal loan for the main degree, an additional loan for post-graduate courses and the so-called associated loan to pay for accommodation, board and textbooks. All that will remain in place and will function.
How does it work? If you go to a commercial bank it will issue you a loan and the Government will underwrite this loan. In other words, the bank can disburse the money without fear because if the borrower fails to pay back, the Government will compensate the bank for this expenditure. This will be effective.
Artyom Kutsenko: I understand, thank you. Mr Putin, may I ask for your autograph?
Vladimir Putin: Here you are. I wish you success. How many students are there at your university?
Artyom Kutsenko: We are a branch, so we have 100 full-time attendance students and 200 people who study by correspondence.
Vladimir Putin: That's a lot. At the time I studied the enrollment in the freshmen year was 100 people. I wish you good luck.
Woman: Good afternoon. On behalf of the women of my district, which is a very old neighbourhood, we would like to ask you to do something to make sure that our children, at least the younger ones, have somewhere to play. The residential blocks in the neighbourhood date back to 1967. At the time they were built there were playgrounds for children and everything.
Vladimir Putin: And they have been destroyed over time?
Woman: Yes, of course. It's just been too long. It's not the kids who broke them down.
Vladimir Putin: Is that somewhere near?
Woman: It is the Dzerzhinsky District, in the outskirts.
Woman: A working class neighbourhood. Old five-storeyed blocks of flats built during the Khrushchev era.
Woman: The houses may be old but there are a lot of young people and a lot of children, and they have nowhere to play.
Vladimir Putin: That is an old problem. By the way, many cities are dealing with it quite effectively. At least that is the case today.
To be honest, I am surprised to hear this in Novosibirsk. Why? Because we hold the best city contest regularly and Novosibirsk has won twice. I think it was in 2003 and 2004. This year the contest review commission has also shortlisted Novosibirsk for the top award. Previously, the prize was 100 million roubles, now it has been raised to 400 million and the money should go towards making the city a more comfortable place to live in.
Secondly, some time ago we decided to set up a housing and utilities fund from which the regions will draw corresponding resources provided they match them with their own outlays. It is a large fund, 240 billion. The Novosibirsk Region received around 1.1 billion roubles out of that fund. That is a large amount. I must give credit to the regional leadership for their quick work because only the regions that prepare corresponding programmes will be entitled to grants. The Governor and his team have submitted such a programme promptly. But that means that part of that money can and must be used to build social facilities. I'll talk to the Governor about it and I will also ask my colleagues in the United Russia and the deputies at different levels to monitor, together with the Governor and the Mayor, how much of the allocated funds will be used to improve social facilities, including in your neighbourhood.
Woman: Yes, the city is looking better and better, a lot is being done, many playgrounds are being built, but most of them are in new residential areas and our neighbourhood has so far been left out. We look at playgrounds in other neighbourhoods and we are envious. We want our kids to have somewhere to play, too.
Vladimir Putin: It's a deal. We will absolutely do it. I repeat: the money has been allocated, it remains to use it rationally, including for social facilities, like I said.
Woman: We'll hope for the best. Thank you.
Woman: Could I make a personal request?
Vladimir Putin: Go ahead.
Woman: This is the first time we are here, so could we ask you for an autograph, please?
Vladimir Putin: No problem.
Woman: These are my kids.
Vladimir Putin: I see. What are their names?
Woman: Kirill, Ksenia and Oleg.
Vladimir Putin: And what is your name?
Vladimir Putin: Here you are.
Woman: Thank you. Good-bye.
Vladimir Putin: What's your name?
Woman: Nadiya Zakirovna. Mr Putin, I have a big problem. I have been working as a street cleaner at RES-1 for four years. My employers provided me with a basement dwelling unit. I've been living there for four years, with two young children. All this time they've been promising normal housing for us. When they employed me they promised to give me a flat. It was written into the contract which I signed. My younger son is 8 and my elder son is 16. The basement is damp and it has no windows. I have applied everywhere I could and all I hear is "No", or "Just wait."
Vladimir Putin: Are you a single mother?
Woman: Yes, I am divorced. You see, I cannot rent a flat because my pay is low and my job is very hard. Nobody wants this job. It used to be that we got flats if we stayed in the job. Now a lot of people are quitting because they are underpaid and overworked. There is a shortage of people and no transport, but we are sticking it out. The only reason I took this job was the promise of a flat.
Vladimir Putin: I understand. I'll talk with my colleagues, first and foremost the municipal assembly, the regional Duma, and the Governor. I think we will be able to solve your problem.
Woman: Please help me.
Vladimir Putin: All right. Give my regards to your kids.
Voice: Good afternoon, Mr Putin.
Vladimir Putin: I am glad to hear you.
Woman: I have to ask you for a favour. I'll try to be brief. My father died in action in 1944. He is a Hero of the Soviet Union. He was born in the Kostroma Region.
Vladimir Putin: Excuse me, what is your name?
Woman: Zhanna Borisovna. He was an Air Force pilot and he has no grave on land. They put up his bust near the school which he finished. I have been visiting it every three years. Now they have written to me that the bust is crumbling: there is a crack on the face, the head has cracked in half, the nose and one ear are gone. I cannot do anything to mend it myself. So I came to your reception room and I have brought a letter asking for help. Schoolchildren know that the man was a native of this village, but the bust is a monstrosity. And underneath there is a caption "Hero of the Soviet Union". This is a travesty. And then I thought, the 65th Victory Anniversary is approaching and there must be many such monuments that need a lick of paint or some repair work. I understand that it costs a lot of money. But everyone lying beneath them is somebody's father or son. You can lean on the massive support of the United Russia. Something must be done about it.
Vladimir Putin: Zhanna Borisovna, first of all, I must say that I am very sorry about what is happening. I bring you my apologies.
Zhanna Borisovna: Oh, no. It is only time that it is to blame. I am not blaming anyone.
Vladimir Putin: In this case specific individuals are to blame.
Zhanna Borisovna: No. It's a village school, it probably doesn't have the money or the specialists. It's just that time destroys everything.
Vladimir Putin: I understand all that. Money is always in short supply. It is how you use the money that matters. Memory of our fathers, those who won this important and cherished victory is certainly a priority for us. As regards local government bodies, we will give them corresponding orders. It is not in fact the question of giving orders, it is a matter for the local government. But we will send the right kind of signals, especially with the 65th Victory Anniversary approaching.
And secondly, you mentioned the United Russia very appropriately. I think other citizens' organisations and other parties - the Communist Party, the Social Justice Party, the Liberal Democratic Party and of course the United Russia - anyway all the political forces represented in the country's parliament must pay attention to this. I am sure they will do it. As for this particular monument, it will be repaired, I promise.
Zhanna Borisovna: I thought that if you had such a programme my monument would also be on the list.
Vladimir Putin: We shall do it.
Zhanna Borisovna: Thank you very much.
Woman: Good afternoon. I work at the personnel department at a warehouse.
Vladimir Putin: What is your name?
Woman: Tatyana Stepanovna.
Vladimir Putin: I am listening to you.
Tatyana Stepanovna: We have workers of different age at our enterprise. Those over 40 began to be interested in the size of their future pension. It is a complicated issue. We have some old-age pensioners on our payroll and we are worried about their fate.
Vladimir Putin: You mean working pensioners?
Tatyana Stepanovna: Yes, working pensioners. The employers and my colleagues are very worried about their future. Official websites speak about shrinking pensions. We have seen on the Goskomstat site that the size of the pension has dropped from 40% of the wage to 22% since 1995. I am not talking about developed countries where the situation is entirely different. But this trend continues and it cannot but worry our workers. Which brings me to my question. Will pensions be raised? Will pensioners enjoy a higher living standard and what will be done to this end?
Vladimir Putin: Tatyana Stepanovna, ensuring that the pension system works efficiently is certainly a priority of the government and of the state in general. Pensions will be raised both in nominal and real terms in spite of inflation. Even with the expected rate of inflation, pensions will grow in real terms. We plan two increases of the basic part of the pension in 2009, in March and in early December. The basic part of the pension is to increase by 37.1% across the board. The ensured part of the pension will be raised by 15.5-16% as of April 1. Under the law, if inflation exceeds the target we will raise the ensured part again. So at the end of 2009 the social pension will not be less than the pensioner's living minimum.
Beginning from 2010 we have the following plans. First, all the pension rights acquired prior to 2002 will be raised by 10%. As someone who deals with these problems you surely know that the most vulnerable group of pensioners are the people who acquired their pension rights in the Soviet times. So everyone who earned his seniority before 1991 will have their pre-2002 pensions raised by 10% with an extra 1% added for every year of seniority. Those who will retire on pension since 2010 will get pensions amounting to 40% of their wages if they have a length of service of 30 years, and the 40% of the wage must fall on the period when insurance premiums were paid.
To this end we are introducing insurance principles into the pension system and we are increasing the insurance premium to 26%. These insurance premiums will be deduced from wages under 415,000 roubles. All the people whose salaries are above that sum will not be entitled to insurance pensions. Those with salaries below that sum will have insurance pensions, those who have higher salaries will not. Why? The whole purpose is that we don't want to see people with smaller incomes pay for the pensions of people who earn big salaries. But the citizens with high salaries, 400,000 roubles plus, the figure subject to be adjusted every year, will be able to make additional savings towards their pensions voluntarily through the mechanism of the pension funds that has been created.
So, I have no doubt that in spite of the problems you have mentioned, including the demographic problems - we are constantly working on them and are gradually improving the demographic situation - we have made detailed calculations of the dynamics of economic development and the needs of the pension system. The pension rights of citizens will be ensured.
Tatyana Stepanovna: Thank you. And another thing, in connection with the increase of the rate of the Single Social Tax, are there plans...
Vladimir Putin: This is not an increase of the Single Social Tax, this is the adoption of insurance principles.
Tatyana Stepanovna: All right. In connection with the adoption of the insurance principles, are there plans to diminish the tax burden on the small and medium-sized enterprises?
Vladimir Putin: Yes. The Single Social Tax used to be 6%, now the insurance deductions stand at around 26%, and the overall tax burden increases to 34%. We are very well aware of it. In this connection the mechanisms that will balance the tax burden on the economy as a whole will be put in place. This above all concerns small and medium enterprises. But not all of them. It will apply to the enterprises in the high technology spheres. There are other spheres such as retailing, services and so on. But we single hi-tech spheres as a priority. The small and medium enterprises working in this sphere will enjoy tax benefits over a transitional period that will last several years, enough for them to get adapted to the new taxation system or, more precisely, to operating under the newly created insurance system. The same applies to agricultural enterprises.
Tatyana Stepanovna: Won't all the other enterprises escape into the shadow sector, as has happened before?
Vladimir Putin: We assume that they won't. But you began your question with the need to ensure citizens' rights to pensions and we have to take balanced and well-thought out decisions in keeping with the dynamics of the development of the pension system and in order to secure the pension rights of our citizens.
Tatyana Stepanovna: Thank you.
Vladimir Putin: Take a seat. We don't seem to be able to part.
Pyotr Aven: Yes, I am back.
Vladimir Putin: Mr Aven, we were just discussing the work of your bank not only with individuals, but also with legal entities. Sergei Shchapov is one of the first visitors here and he raised the question of the work of small and medium-sized enterprises.
Let us not discuss the whole sector, I hope that Mr Shchapov has filled you in on what the Government plans to do in the near term. I have a specific question: you have been telling us in glowing terms how you personally finance the economy and you have pledged to continue doing so. Here is a specific case.
Sergei Shchapov: I understand that I can open an account with you and...
Pyotr Aven: Speaking about dollars, our portfolio is 25 billion dollars of which small and medium enterprises account for about 25%. That is a lot of money. We do provide large loans to small and medium-sized businesses. So, there is no question that you should come to the bank and work with us. I have already told Mr Putin today that our net credits to the Novosibirsk Region amount to $350 million. $50 million are in the accounts of enterprises and we issue loans to the tune of $400 million. So, we definitely are in a position to issue loans, provided it is a normal business.
Vladimir Putin: How much do you need to be able to work?
Sergei Shchapov: For starters, I don't think we should take large loans, but we could do with several tens of millions.
Vladimir Putin: But you have been in the business for some time.
Sergei Shchapov: I mean as an initial loan from the bank.
Pyotr Aven: Until recently we were thinking in terms of higher rates, but now I think they will go down, so I think it is not a bad time to come to the bank and to work with us.