27 november 2008

Prime Minister Vladimir Putin chaired a Cabinet meeting

Vladimir Putin

Cabinet meeting

"Obviously, one of the major anti-recessionary tools is federal budget funds. We must effectively allocate them to back solvent demand in the economy, and to ensure unqualified fulfillment of social liabilities, including timely payment of state-paid employees' wages, pensions, and benefits."

Transcript of the start of the meeting: 

Vladimir Putin: Good afternoon!

Let's start with real-time information. Mr Zhukov, starting on December 1, the federal executive bodies are expected to switch to a new payment system. How are you preparing for this?

Alexander Zhukov: Yes, Mr Putin, practically speaking, the federal budget institutions will switch over to a new payment system on Monday. The labor compensation fund will be increased by 30%. This applies to more than three million public sector employees. This sum has been allocated from the budget and transferred to said institutions. We have conducted meetings in all ministries. We are ready for the change, and have endorsed new staff lists.

The increase in the labor compensation fund does not mean that every employee will receive 30% more. The introduction of the new payment system implies more pay for the quality and intensity of work. Special bonuses have been introduced. Nobody will receive less than now. The federal executive bodies will establish special methods for evaluating the performance of top managers. Their salaries will be tied to the wages of the main contingent of public sector employees. In addition to that, starting January 1 of next year...

Vladimir Putin: I beg your pardon. We have already agreed, and Mrs Golikova has reported to me about this, that we will draft methodological instructions for different industries to prevent any bias in fixing salaries and wages.

Alexander Zhukov: This is absolutely right, and we also discussed this at the meeting. All ministries have received the relevant methodological instructions. In compiling staff lists, we were guided by these recommendations. Moreover, starting January 1 of next year, we will introduce the new minimum wage level; it will be increased to 4,330 rubles. The new budget is based on the new payment systems and the higher minimum wage level. The budget provides for the required sums and they will be paid without fail.

Vladimir Putin: So, the new system will come into effect on December 1.

Alexander Zhukov: Yes, starting on Monday.

Vladimir Putin: All right. Mr Ivanov, do you hold meetings of the Commission on High Technologies and Innovations? What are you planning to discuss?

Sergei Ivanov: In the latter half of the day, I will hold the meeting of the Commission on High Technologies and Innovations, where we will discuss two questions.

First, we will discuss ways of increasing the effectiveness of energy consumption by using nanomaterials and nanotechnologies in the fuel-and-energy sector. Everyone knows that we do not save energy well. Experts maintain that we can potentially save 30% of the consumed energy. The relevant figure for the industry is 32%, and for housing and utilities, 26%.

This is our potential and it is huge. In this context, we are planning to instruct four ministries and departments (the Ministry of Industry and Trade, the Energy Ministry, the Ministry of Science and Education, and the Ministry of Regions) to, in the next three months, draft together with two state corporations, Rosnanotekh (Nanotechnology Corporation) and Rosatom (Nuclear Energy Corporation), and the Academy of Sciences and the Kurchatov Center, energy-saving pilot projects based on the use of nanotechnologies. First of all, we should pay attention to the use of semi-conductors, that is, light-emitting diodes. Incidentally, Rosnanotekh is already funding the first project on the mass production of light-emitting diodes for housing and utilities, for industry, and for the entire economy in general. In addition, we should speed up the development of superconductivity technologies and the use of solar energy. This is the first question.

Now the second one. We will review how scientific and educational establishments are introducing innovations. Regrettably, we have not achieved much in this sphere, either. One of the reasons is that up to this day, the state scientific and educational institutions, which are organized by law as part of the public sector, and are funded from the budget, cannot legally use the achievements of their intellectual performance, and deal with innovations. In this context, the Ministry of Education and Science has drafted a bill allowing these institutions (most scientific establishments are financed from the budget) to establish small innovations companies on certain transparent conditions. This has been done to help applied sciences to more effectively introduce their achievements, including those made on the budget's money, into the production sector.

Vladimir Putin: All right. Mr. Shchegolev, could you tell us about literary awards?

Igor Shchegolev: Yes, we are summing up the results of our literary season. We have given the national literary award, the Big Book, to authors from many regions. Numerous works were sent from the provinces, and all in all, the jury reviewed about 370 pieces. It is probably symbolic that, in the year of Alexander Solzhenitsyn, one of the awards went to the author of his biography, Lyudmila Saraskina. Mr Solzhenitsyn himself was posthumously given the Award for Honour and Dignity. In early December we will conduct a whole number of events devoted to his 90th anniversary of his birth. You are welcome to take part in one of them.

Vladimir Putin: We have just discussed the implementation of the investment projects. Mr. Levitin, what can you say about the construction of the high-speed road between Moscow and St. Petersburg?

Igor Levitin: Mr Putin, yesterday I went to the section that we are planning to build in 2009. I had a meeting with the investor. This is a consortium in which a major French company takes part. Despite the current conditions on the financial markets, they reaffirm their readiness to take part in the construction of the road.

Right now, we are preparing plots of land there and buying them out. We have questions for Rosleskhoz (Federal Forestry Agency) and the Federal Migration Service, whose representatives accompanied me. We are hoping that by June 1, that is, the day when we must give the road to the concessioner, all procedures will be completed. In general, the investors reaffirm their participation in concession agreements on all transport projects.

Vladimir Putin: All right. Mr Zubkov, we have discussed the problems of competitiveness with businessmen here. A big part of our conversation was devoted to agriculture, and, in part, to the support of grain producers.

We have collected a record harvest, but have immediately started having problems with selling it. We have mapped out a plan to support those who are working in this sphere. What about the implementation of this plan?

I can say right away that representatives of the agro-industrial sector have expressed a number of requests and wishes. They want us to help them sell not only grain but also corn and sunflower, and to buy grain and make interventions faster.

Viktor Zubkov: Thank you Mr Putin. Last week, I conducted a number of meetings to regulate the grain market. Indeed, we had a high grain harvest, and have fully provided the state with food grain, fodder, seeds, and carry-overs, and grain in the state reserve, but we still have more than 20 million tons of extra grain. This is not extra, however; this is the grain grown by the farmers. The state is simply obliged to withdraw this excess from the market.

Today, we are planning to purchase more than 10 million tons of grain for the intervention fund. We have done a great deal to make this possible. We have increased grain prices across the board because for some regions, but in the Volga Region, the Urals, and Siberia they were low. This has allowed us to increase the number of trade sessions, and to broaden the elevator network. I have ordered the transfer of part of the grain from the Central Federal District to other regions.

These measures have already allowed us to buy two million tons of grain for the intervention fund, which is much more than we did during the entire intervention campaign of the past year. The farmers have already received 8.5 billion rubles for this grain, and can use the money for paying off loans, and purchasing mineral fertilizer and diesel fuel.

The situation with grain exports is far from being simple. Global grain price have fallen by one third. In some regions, which are considered traditional grain suppliers, export prices are eve below the costs. Therefore, we are planning to export another 10 million tons of grain.

We are also reducing infrastructure-related transportation costs. We have substantial reserves here. I have ordered faster VAT return (up to 30 days), and decided to subsidize exports with another 10 billion rubles, because different grain-producing regions have gaps ranging from 1,900 rubles to 1,700 rubles per ton.

In addition, we, together with officials from the Foreign Ministry, are searching for potential grain importers. We must expand our markets, not only for grain but also for its byproducts, such as flour. We are also drafting proposals on tied loans and possible humanitarian aid. All these measures are aimed at ridding the market of excessive grain - about 20 million tons.

I believe that these measures will make it possible to withdraw excessive grain, all the more so because this year farmers have increased areas under winter crops for another 300,000 hectares. They are hoping that there will be a demand for their grain next year. Therefore, we will continue working with the intervention fund to support grain exports. These 20 million tons include grain, corn, and sunflower. To sum up, we are monitoring the implementation of these tasks.

Vladimir Putin: Yesterday, new technical regulations for dairy products were discussed. Some officials are hinting at changing them a little. I suspect that, as you told me (we discussed the problem with representatives of the agro-industrial sector in the Leningrad Region), this request is linked with big imports of milk powder. What do you think about this?

Viktor Zubkov: Indeed, some regions are resorting to this. Because milk is a seasonal product, they turn excessive whole milk into milk powder. To my knowledge, they are now putting it on the market, considering that new rules on milk will be introduced on December 17, and it will not be very profitable to turn milk powder into a milk beverage. This is why we are taking measures in this sphere. We have drafted a government resolution to use the intervention fund for the purchase of milk powder, and withdraw it from the market.

Vladimir Putin: All right. Should the introduction of the new rules be delayed?

Viktor Zubkov: It so happens that the adopted law does not have a transitional period. This is no good, since some of the products which have been or are being produced may be stored for up to six months. Therefore, if you give us such instruction, we will consider this. Perhpas we should have a transitional period and review some indices for it.

Vladimir Putin: I am not convinced about this. This is just a question. Please look into it, because if the decision has been adopted, it should be carried out rather than delayed. You should provide us with quality products. When I say "us," I mean not the members of the government, but the citizens of the Russian Federation.

Viktor Zubkov: I think that the introduction of the new rules should not be suspended by all means. The Ministry of Agriculture and the Ministry of Economic and Social Development could make some adjustments in the regulations that are now being drafted so as not to delay the introduction of the new norms.

Vladimir Putin: Fine.

There are two more questions that were raised at the meeting with farmers in the Leningrad Region, primarily the land question. I would like to draw your attention to it once again; I would like the Economic Development Ministry and its subordinate agencies to return to this problem and consider it with the Ministry of Agriculture.

Farmers face concrete challenges. Unfortunately, a criminal component can still be observed in joint ventures. There are also everyday and production-related problems. I know that these matters are complex, but it is necessary to address them. It is also necessary to work out favorable conditions for the development of agriculture.

There is one more issue that I would like to touch upon. It concerns finance. Given the present circumstances, farmers have brought up the question of a possible loan payment term extension. I would like you to consider it with the Minister.

Let us proceed to today's agenda. First of all, however, I would like to remind you that the United Russia congress, whose guidelines the Government heeds in its work, announced a comprehensive program for encouraging business activity and social support of ordinary people.

The key objective of these measures is not simply to breeze through the global economic crisis, but also to ensure the implementation of our strategic plans. I would like all ministries and agencies to map out clear, step-by-step programs to realise the set tasks, including those related to the preparation and adoption of required bills and statutory acts. They should continue attentively tracking developments in their specific branches and responsibility zones, and closely cooperate with the business community, trade unions, and heads of local governments.

Obviously, one of the major anti-recessionary tools is federal budget funds. We must effectively allocate them to back solvent demand in the economy, and to ensure unqualified fulfillment of social liabilities, including timely payment of state-paid employees' wages, pensions, and benefits. By the way, I would like to highlight that the state of affairs is not critical in that sphere yet, but there is an increase in wage arrears. I would like you to pay attention to it. By the way, it is not connected directly with the world financial turmoil - these are simply technical questions. In modern conditions, however, they should be eliminated.

Today we will consider the report on budget execution within the first nine months of 2008. I would like to underscore that financing of priority budget items was boosted, which is good news. For example, education expenses have totaled 198.6 billion roubles, compared with 174 billion within the same period of the last year. We have allotted 155 billion roubles to the development of healthcare and sports, which is almost 50 billion more than in 2007.

Financial aid to Russia's Regions was boosted as well. Interbudgetary transfers have grown 177 billion roubles, amounting to 740 billion roubles.

At the same time, despite the fact that the year is coming to an end, 16 ministries and agencies have applied less than 65% of the allocated budgetary funds. I would like to highlight this issue, too.

Requirements concerning budgetary expenses' efficiency should be applied to distributing the Investment Fund's resources. Today, we will assess its progress and determine its tasks for the period ahead.

I would like to remind you that the Fund was intended to back the projects of prime importance for this country's social and economic development, to become a powerful financial tool of comprehensive development of territories, and target support of innovative business initiatives.

The Fund's work is based on the principles of state and private partnership. That is, federal funds should become the catalyst of attracting investments from regional budgets and private companies.

It's been three years since the creation of the Fund. Within this period, it has accumulated almost 400 billion roubles. 21 investment projects have been selected already.

However, judging by the submitted materials, there are obvious problems. For example, financing has been provided only to 11 projects out of the 19 planned to receive the Fund's reserves this year. No concessionary agreements for constructing four federal motorways have been concluded. Moreover, there have been instances when a private investor has already started to invest money, but the state does not fulfill its liabilities.

The existing procedure of project selection is full of bureaucratic hassle. We discussed it today, just before the Government meeting.

I consider it necessary to work on improving the Fund's regulatory base, to establish a more effective project selection and realisation procedure, and to organise due control of their implementation.

There is one more important point - to make strategic plans, investors and local governments should be aware of the Investment Fund's possibilities as well as their own abilities. This means that we need a long-term forecast for replenishing the Fund with money.

It is necessary to pay special attention in guaranteeing that investors duly fulfill their liabilities. I have mentioned that in some cases, investors have implemented their liabilities either fully of partly, whereas the state has not invested its funds yet. I will add, though, that I have just looked through the list of these projects and I can say that in most cases the state invests money, but investors are in no hurry to do it, and it is necessary to synchronise these processes. Given the current financial turmoil, it is extremely important. The state must be sure that the investor sticks to its pledges.

Also, in my opinion, under the present circumstances we should once again analyse the selected projects in terms of their quality, prospects and relevance. It is necessary to estimate their effectiveness today, as I have said. We should find out how they will contribute to encouraging business activity in the economy and stimulating home demand. I would like to draw your attention to it - especially in those regions that will face certain problems, including the social spere. We must allot these big funds to ensure that we will weather the challenging period of the world economic crisis without losses. Furthermore, it must not take a toll on our people. We should allocate money for the spheres that are most in need of it.

Within the next two or three years, it will be possible to concentrate on supporting local projects, which are already at the completion stage. Building, which has already started, should not be given up halfway; it is necessary to complete it in the near future.

More Information