Prime Minister Vladimir Putin chaired a meeting on the economy
29 october 2008
Vladimir Putin's opening address:
Today is Elvira Nabiullina's birthday. Please, accept our sincere and warmest congratulations.
Good afternoon, colleagues,
Today we will continue discussing both current and strategic issues related to the Russian economy's development at this challenging time for the world financial system.
The Government has taken timely measures to protect our country's financial system. The banking sector has been provided with additional liquidity at the expense of state resources. I would like to point out to the financiers attending this meeting that the banks should use these funds on loans with normal, market-based interest rates. Again, market-based interest rates do not mean speculative rates to make excess profit. The Finance Ministry and the Central Bank will ensure that this requirement is met. I have already given the necessary instructions. Hopefully, they will be followed.
I would like to underscore that it is of vital importance to secure sustained operation in key domestic industries. I mean the construction sector, key retail companies, agriculture, small businesses, the United Industrial Corporation (OPK), and the oil industry. Certainly, additional stabilisation measures are being worked out for each individual sector. Their practical application is either underway or soon will be started.
I'd like to list a few basic steps we have taken. In construction, the Government is buying out newly-built housing for the military and relocating people from dilapidated dwellings. We have increased the Housing Mortgage Credit Agency's authorized capital to support mortgage programmes. In agriculture, we have boosted Rosselkhozbank and Rosagroleasing's authorized capital. Also, we have compensated for the increase in POL prices. An extra 20 billion roubles will be allocated for "Milk" and "Fertilizers" programmes.
Larger funds will be allotted to small businesses at the expense of the federal budget. This measure is now under discussion, but it should be accelerated. I would like the Economic Development Ministry to submit its proposals in this respect. In the oil industry, a tax deduction has been initiated.
I want to emphasise that in implementing this "stabilisation package" we must protect the rights of all interested parties. Thus, by buying out unfinished housing, the government supports the building sector. At the same time, there will be a reliable guarantee that people who bought housing under construction and actually financed this construction will receive their apartments.
We must also protect the interests of minority shareholders who will ask for government support to settle their foreign debts.
No doubt, considerable budget funds will be needed to support the financial sector and industries. The amount should be commensurate with the scale of the problems that arise. Half-measures will not accomplish our goals. However, there are budget limitations that cannot be ignored. For this reason, the effectiveness of this budget spending - both current and additional - is vital.
The stabilisation measures adopted by the government are to minimise the impact of the global financial crisis on the Russian economy. Many of them are unusual for a market economy. Note that our foreign partners are guided by the same logic, as you know.
However, I want to be clear that there is no intention to nationalise the Russian economy. The state's growing participation in the country's economy is a forced and temporary measure taken for the period of global economic instability.
Strategically, we continue to rely on measures to encourage private enterprise and to create favourable conditions for investors, both Russian and foreign investors, to ensure sustainable economic growth.
Therefore, this solution should not be the yardstick for assessing our activities; we must thoroughly analyze the long-term consequences of these measures for the Russian economy. This is the way to look at our actions.
So, let us start working.