29 december 2008

Prime Minister Vladimir Putin chaired a Government meeting

Vladimir Putin

Government meeting

"Today, we can say that the most urgent decisions have been made. We have created an anti-crisis system of state administration comprising special legislative acts, a system for monitoring the situation, and management and emergency bodies. We hope that these measures will prove effective in 2009 and will help to prevent plunging standards of living and rising unemployment, and will facilitate the sustainable performance of the financial system and the industries."

Vladimir Putin's opening address at the Government meeting:

Good afternoon, colleagues,

This is the final meeting of the Government this year. Today, we are going to sum up the results of 2008 and outline the Government's priority tasks for the near future.

I will begin by saying that the Russian economy and social sphere will finish the year in the black despite negative dynamics in the fourth quarter. GDP is expected to grow 6%, and many other key socio-economic indicators will also be positive. In particular, growth in agriculture has been even higher than expected. The latest data show a 10% increase. Investments in the economy were also 10%, which is higher than we had expected. The average monthly wage will grow, despite the 13.5% inflation, by 10%-12% in real terms. Pensions have increased by a third.

Of course, these results could have been better. The growth of industrial production was slightly lower than expected. But on the whole, the results are positive although they could have been better, as I have said.
We rode on the positive dynamics of the first half-year. However, our economy has long been integrated into the global economy. We have been saying since the early 1990s that we need to integrate into the global economy, and now we are reaping the fruit of that decision. As they say, be careful about what you wish for, and now our economy cannot remain immune to global trends, neither positive nor negative.

The global financial crisis, which has become an economic crisis, has also affected Russia. Its effect on the Russian economy has been considerable due to its structural specifics. We have suffered the effects of the global financial collapse and also saw prices of our key export goods - metals, energy, chemicals and other commodities - plunge.

I must emphasize that we always - and you know this very well - take into account the possibility of negative events when formulating our economic strategy. I have spoken more than once about the danger of market fluctuations, which is why we have been pursuing a carefully balanced financial policy. We have accumulated solid reserves, and when the threat of a crisis became reality Russia could use them in its anti-crisis package. As you know, we are doing this now.

This allowed us to promptly make requisite decisions, and to allocate funds for their implementation from our own, internal reserves. Moreover, we have started using them to replace foreign loans made scarce by the crisis.
I can tell you that the Central Bank and the Government have reserved huge funds, trillions of roubles, for the anti-crisis package, notably for maintaining banking liquidity and compensating huge income shortfalls. Even if we don't need to spend all of them, the scale of planned allocations points to our greatly increased possibilities.

I must say, though, that the Government does not intend to use all of its reserves to fight the crisis regardless of the effect of such measures. The priority goal today is to increase the efficiency of budget spending and to maintain macroeconomic stability. I am not going to enumerate the anti-crisis measures here. I will only say that the logic of our actions implies a combination of systemic measures with pinpoint solutions.

To begin with, we must fight the most painful elements of the crisis: We must support the banking system. Not that we want to help rich bankers, but we need to safeguard the economy's blood system, maintain its stability, and prevent the loss of people's savings. This danger has now retreated. The banking sector has been provided with the necessary funds, and we have created a system of rehabilitating lending establishments incapable of honouring their commitments. This system is operating smoothly and, most importantly, without detriment to depositors. In fact, this was our goal and we have attained it.

Next, we have taken measures to maintain business activity in the economy, slashed taxes, and drafted measures to support the key sectors of the real economy, above all engineering, transport, defence enterprises, fuel and energy, construction, agriculture, retail trade, and small businesses. Of course, we know that the real economy has been pressured by high banking interest rates, which is exactly why we have drafted special measures to support individual sectors.

We have published a list of strategic enterprises recently, which will receive additional assistance if needed. I will convene a meeting tomorrow to see that the mechanism worked out to support our key industries is operating efficiently. We will start working on that list tomorrow. You know that I have often visited the Russian regions, and I have been visiting them and their enterprises even more often now. I also expect the members of the working group to spend time in the regions and at their enterprises. I want Government members to see the problems facing the enterprises and the people, so as to feel the problem not as an abstract but as a real threat, and to make prompt and effective decisions.

On the other hand, the Government expects the largest taxpayers and employers on this list to act responsibly, to support the Government's investment projects, and to preserve jobs. I have said so before, but I want to reiterate it: in the current conditions the state must not ensure continued profits for the business, but must preserve the viability of enterprises, save their personnel, and create the environment for the modernisation of enterprises and their effective development when the crisis is over.

The Governmental Commission on Sustainable Development of the Russian Economy will monitor the operation of these strategic enterprises.

And lastly, special measures have been drafted to help the citizens who have lost their jobs or saw their income trimmed. I am referring to the decision to raise unemployment benefits, introduce regional employment programmes, and provide assistance with mortgage payments.

At the same time, the Government must use its federal structures, territorial agencies, trade unions and law enforcement agencies to strictly monitor compliance with labour contracts and labour legislation, so that dismissed personnel will not be left without severance money and unemployment benefits, that is, the means of subsistence. That would be absolutely unacceptable. Such illegal actions, which, unfortunately, have been reported, must be stopped quickly and firmly. I ask the judicial bodies to consider such cases as a priority, although we know that courts have had more than a full load.


Today, we can say that the most urgent decisions have been made. We have created an anti-crisis system of state administration comprising special legislative acts, a system for monitoring the situation, and management and emergency bodies.

We hope that these measures will prove effective in 2009 and will help to prevent plunging standards of living and rising unemployment, and will facilitate the sustainable performance of the financial system and the industries.

If necessary, we are ready to implement additional measures, including those concerning specific economic sectors that require the Government's special attention.

In this connection, I would like to thank State Duma deputies and Federation Council members for their support. The Government would not have been able to act as resolutely and quickly as was required by the situation of the past few months without the Parliament's support.

And now a few words about our prospects and plans for the future. Despite all problems, we are not going to give up or forget them.

In November, the Government approved a long-term national development programme until 2020.

This implies that Russia must assert itself as a global leader in terms of economic development levels and key quality of life indices by the end of next decade. We are not going to scrap our plans. On the contrary, we have been working hard to implement them. Moreover, the current situation only confirms the correctness of our conclusions, assumptions and plans in favour of economic diversification and innovation.

In the past two weeks, we have passed a legislative package aiming to reduce administrative barriers that hinder entrepreneurial activity. The Government has drafted competition-incentives bills, due to be submitted to the State Duma. Starting on January 1, federal public sector agencies will switch over to new remuneration forms aiming to provide better services to the population and incentives for the best doctors and teachers. Despite all the manifestations of the crisis, the wage fund for budget-dependent employees has swelled by 30%.

In all, the Government is set to implement 60 high-priority projects until 2012. We have selected project managers and stipulated specific deadlines and funding sources.

First of all, this concerns reforms in the human resources sectors. I have repeatedly noted that current investment in education, healthcare and the social sector will become our competitive advantage tomorrow.

We must create a truly competitive environment in welfare sectors. We have introduced modern healthcare standards and educational curricula, and have started implementing measures that aim to promote a healthy lifestyle. Preventive medical check-ups and programmes for treating oncological and cardio-vascular diseases will be implemented more actively.

As far education is concerned, we plan to focus on creating a system of national research universities, to support the introduction of modern pre-school education models and to implement advanced training programmes for schoolteachers.

By late 2009, average welfare pensions are expected to match subsistence minimum levels. This objective will be accomplished.

As regards the housing policy, we must finalise a system of regulatory documents promoting competition in the construction industry. We have approved modern technical regulations making it possible to build top-quality and much cheaper housing than it is today. We must also involve additional land resources now being misused by numerous federal agencies in the economic process. The relevant Housing Construction Promotion Fund has been established. We are expecting tangible results from its work.

Furthermore, we will devote considerable attention to creating a full-fledged Customs Union in Eurasia and facilitating integration processes between Russia, Kazakhstan and Belarus. In 2009, the Government plans to expedite the creation of modern market institutions. Notably, it will implement measures stipulated by the Competition-Incentives Programme and the Financial Markets Development Strategy.

We are now conducting an inventory of production modernisation programmes. After we analyze its results, we will concentrate our resources in high-priority spheres. This will enable our industry to assert stable positions in conditions of post-crisis development.

Due to the industrial recession, the national infrastructure is subjected to smaller loads. It also gives us a chance to make our main industries more cost-effective. This implies introducing energy-saving technologies and addressing the transport sector's weaknesses.

I would like to focus on energy-saving technologies which remain on the agenda despite plunging energy prices. In fact, today this objective is becoming increasingly important. In effect, all industrialised nations are moving along this road. This will make it possible to create pre-requisites for the future and to create additional solvent demand sorely needed by the Russian industry.

* * *


In conclusion, I would like to stress once again that an unabating team spirit and a feeling of mutual camaraderie has guaranteed and will continue to guarantee our success.

It is probably easier and more comfortable to work at a time of general prosperity. But I want to draw special attention to the fact that our work in difficult conditions must give rise to greater enthusiasm, rather than stagnation, despondency and pessimism.

This is a challenge and a chance to prove our worth, to display our potential, effectiveness and aptitudes. I have worked together with many of you present here in far more difficult conditions. At first glance, it would seem that we are now surrounded by problems. However, we will break through if we work effectively, just like we had worked and scored positive results in previous years.

I want to thank you for your work in 2008.