Vladimir Putin chaired a meeting of the Presidium of the Presidential Council on Developing Local Self-Government


"The logic behind our action is as follows: to stimulate domestic demand, restore normal credit lending for enterprises, and implement selective measures aimed at protecting the domestic market and supporting specific sectors and types of production."

Vladimir Putin's introductory remarks:

Good afternoon, colleagues,

You no doubt know that at the meeting of the Commission on Regional Development in Yaroslavl two weeks ago, I discussed the participation of regions in implementing anti-crisis measures with a number of governors. I deem it necessary to continue discussing this issue with representatives from the municipalities. The abbreviation ACM (anti-crisis measures) is self-explanatory and fitting in the current environment.

The municipal authorities are the most in-touch with the real problems of people. You know better than anyone else the situation at home, at every individual plant, city, or village.

Allow me to recall that by law, the municipal authorities are obliged to take part in providing jobs and supporting small business. Now is the time to focus on these tasks. Success in resolving the arising problems will be a test of local authorities' efficiency.

Allow me to also recall the measures being taken at the federal level to support the real economy, and, hence, to keep jobs, which is crucial in the current conditions. I will speak about this a bit later.

In the last few days, we have made a number of major decisions. We have decided to guarantee strategic enterprises an additional 300 billion roubles in loans. We have also envisaged the Government's purchase of private company shares, subsidized interest payments on loans, priority provision of state contracts, debt restructuring, and tax loans.

In the near future, jointly with the regions, we will compile a list of the most important strategic enterprises, about several hundred. We originally thought the list would include about 300 or 350 enterprises, but now we may even put more on the list - over 400. I will add that the regions should follow suit, and should back at least 1,500 enterprises - by this I mean the flagships of our industry at the federal and regional levels.

We are working out special measures to support specific economic sectors as well, including farm machinery manufacturers and all agribusiness. However, today I would like to discuss in greater detail small and medium-sized businesses. Together with the governor, we visited several enterprises today and saw that they were operating steadily and rhythmically. They obtain the necessary loans and have the sales market for their products, and even when companies are linked in some ways to foreign suppliers or investors, their localisation level is high. In the near future, we will look into the problems of the automotive industry.

The logic behind our action is as follows: to stimulate domestic demand, restore normal credit lending for enterprises, and implement selective measures aimed at protecting the domestic market and supporting specific sectors and types of production.

We will give about 30 billion roubles to Vnesheconombank to support small businesses and 10.5 billion roubles in federal budget funds to develop their infrastructure.

We will continue to co-finance micro-credit lending. As I see it, it is being done well here, in the Lipetsk Region. We will support the surety funds. We hope that these funds will provide surety and subsidise interest payments on loans attracted by small and medium-sized businesses.

With regard to the evolving situation, we discussed in detail the very acute problem of tariffs. We realize full well that the economic status of major infrastructure monopolies largely depends on these tariffs. We talked about this with the regional leaders. At the same time, we deemed it possible to revise the earlier planned tariff growth rates and took a decision to this effect. On January 1, gas tariffs will rise by merely 5%, not by 25% as it was first planned, and their average annual growth should not exceed 16.3%, including for the population. We will look at the developments in the economy and the social sphere in the first quarter of next year, and will only then decide on our further steps.

The average annual growth in railway freight tariffs should not exceed 12.4%, as opposed to the earlier planned 18.7%. There were plans to raise these tariffs to 14% starting January 1, 2009, but the figure was then revised downward. It will not exceed 5%. In order to compensate for shortfalls in the revenues of the Russian Railways monopoly, the government decided to earmark an additional 50 billion roubles for its support.

I would like to draw your attention to issues relating to people's lives, primarily payments for housing and utility services. Much depends on regional and municipal authorities in this sphere. We must not, and cannot, act like we acted before. It is clear that housing maintenance and utilities are underfinanced to a great extent, but I nevertheless call on the municipal authorities to take a responsible and cautious attitude to the tariff policy in 2009. You know we have a regulation whereby a family that spends 22% of its total income or more on housing and utility services is partially compensated for these payments. At this meeting, we must discuss ways to help people who have found themselves in a difficult situation and devise a mechanism of additional targeted support for them. We are ready to allocate federal funds for this purpose.

Now let me turn to the employment problems. The Government is monitoring the labour market every week. Reports show that on the whole, the situation is under control, but there are some alarming signals. They are primarily coming from the regions where companies have been hit the hardest by the decline in industrial production, and where jobs largely depend on so-called strategic enterprises.

Since the start of October, more than 7,500 companies have announced their intention to reduce personnel. Some 207,000 workers are already working a shorter week or have been forced to go on vacation. I would like to emphasize that this means smaller wages and salaries.

To support people who are facing problems with jobs, we have raised the maximum unemployment benefits to 4,900 roubles per month and provided for a number of measures to help families who find it difficult to meet mortgage payments. I will also add that people who have lost jobs or had their wages considerably reduced because of layoffs will be allowed to delay interest payments on mortgages or the principal debt if the time has come to pay off loans.

Moreover, an additional 50 billion roubles have been reserved in next year's budget to conduct active policy in the labor market. All these funds will be transferred to the regions through the channels that you are already familiar with, but they are designed to fund concrete programmes to create jobs and organise public works. These programmes should be drafted with the active participation of local authorities by February 1 of next year. Time is short, but it goes without saying that this deadline should not be met at the expense of quality.

No one benefits from cliched programmes with general wishes, even less so in the current environment. You are fully aware of this. Let me repeat that considerable federal funds have been allocated to deal with unemployment at the local level, and they should do the job. They should reach their destination and start working, and people should feel the change.

Therefore, we will first thoroughly analyse the programmes drafted by the regions at the government level before making a decision to finance them.

I'd like you to pay particular attention to the following.

First, it is important to expand the scale of public works, and not only for those who have lost their jobs, but also for those who have to work a shorter week for smaller wages. Public works may be in demand in such spheres as road building, housing and utilities, agriculture, forestry, and provision of urban and rural amenities.

Second, proactive professional retraining must be organised for laid off employees. They should be assisted in moving to a new place of residence and work, if need be.

Needless to say, we have enough levers of influence on business and enough ways of cooperating with it. It is necessary to involve private companies in this effort and make sure they are highly responsible under the circumstances. It is easy to lose employees, especially skilled ones, but it will be difficult to find them when production goes up.

It is essential to help people start new businesses. The local authorities should help budding businessmen with organisational problems, such as the search for office space, connection to the communal networks, and access to municipal contracts. In this context, we will continue the programme of assisting new businessmen, that is, a system of grants.

Special attention should be paid to the development of small and medium-sized businesses in towns and villages. Let me repeat that the local authorities should give priority to the questions of employment.

Respected colleagues, we will also discuss the readiness of municipal leaders to comply wholly with the law on the general organisational principles of local self-government. This law envisages a transition period for a smooth introduction of the new local self-government system, fixing its legal basis, and manning effective managerial bodies with due account for regional specifics, as mayors and governors requested. Local self-government bodies have been fully formed in 81 of Russia's constituent entities for today, with a total of 341,000 employees.

Another 19 entities will finish their transition period on January 1, 2009, with 12 months of postponement for Chechnya and Ingushetia.

Not all problems have been settled during the transition period, namely the municipal boundary description and municipal property delineation. These affairs are all too often muddled, and are occasionally outside municipal competencies. I realise that full well. I see how complicated the matter is. More than that, it takes large funds to settle such problems-more than local authorities can afford nowadays. As a result, we have agreed to postpone the deadline for describing and fixing the boundaries of municipal entities and for settling municipal property disputes to January 1, 2012. The State Duma approved relevant amendments yesterday, as you might have noticed.

We will also discuss strengthening the financial basis of local self-government today. I think we should ponder the prospects of passing additional sources of tax revenues to city halls. The Government is analysing relevant initiatives, and I have discussed the matter with the Finance Minister today.

We make it a point to act as quickly as possible in such matters. We will definitely keep in contact with regional leaders because what we need is justice in city-region relations. This, too, should be talked over.

A decision has been made to compensate the revenues regions are losing due to reduced taxes. I hope the regions will transfer a portion of those compensations to local budgets. On the whole, we will streamline the procedure of transfers, which should increase their role as incentives. Municipal entities also need encouragement in developing their own economies.

Last but not least are ambulance and school bus programmes. As you know, the federal budget has entirely funded them as national priorities, though they legally belong to municipal affairs. I deem it necessary to help cities with modernising other municipal transport-passenger and special. I have given necessary instructions to the Economic Development, Regional Development, and Finance ministries. The Government will have a final discussion of the issue tonight. Transport modernisation will improve urban life and support the Russian automotive industry.

At the same time, we should think today about the extent to which towns and regions can contribute to the programme.

That was all I wanted to say for starters.

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