Transcript of the start of the meeting:

Vladimir Putin: Mr Kudrin, where are we in terms of the preparation of the budget, and how are those budgetary means of solving the social problems and problems in manufacturing working?

Alexey Kudrin: Mr Putin, the State Duma's budgetary committee is meeting at the moment. We are working through the weekends together with State Duma deputies to prepare the first version of the new draft law on this year's budgetary changes. On Monday the Duma will meet for the first reading of the budget.

Overall, the draft law as envisaged, and all those essential decisions related to supporting the economy and carrying out anti-crisis measures, are supported by the State Duma deputies and members of those committees where we have already been able to consider these issues.

There are of course already some alterations to be made to the budget in its second reading. We would like some of these corrections to be considered particularly carefully because they can improve the suggestions that the government has prepared on several positions. For this reason, we are willing to work with deputies on defining the discrete parameters of our suggestions.

With regard to how the anti-crisis measures are working, irrespective of these corrections, under the authority that the Duma has given Government, anti-crisis measures are already being implemented and above all are having an impact on the automobile and aviaton sectors. Guarantee mechanisms for transport, small businesses and exports, agricultural subsidy rates, and other sectors of the economy are already seeing returns. Regarding other measures that you have taken in meetings on the automobile industry, documents for the transfer of the necessary resources are already being prepared.

This is all being done under the Government authority granted to us by the Duma, even a slightly in advance of those measures that will be reflected in the budget.

Vladimir Putin: I would like to draw attention here to the Ministry of Economic Development, which you also head - everytime we support an industrial sector or business, chiefly businesses, your Ministry must demand to be shown their plans for cutting expenditures. This also applies to the automobile construction industry.

Alexey Kudrin: I think that the suggestion of measures related to cutting expenditures should apply to all businesses receiving offers of state support. Government support should be offered to those businesses that are willing to rationalise their work, increase productivity, and adopt new and more economical technology.

The military-industrial complex, in which the main shareholder is traditionally the state, has already been examined by the commission headed by the Deputy Finance Minister, along with 91 businesses. Most businesses need credit. Even without the government guarantees, additional measures, and subsidies most businesses, nearly all of which who turned to us, had already applied for loans from our leading banks. Thus, they didn't even need our special governmental support measures. These instances were simply observed, brought under control, and have already received credit in the order of one hundred billion rubles. This is the reality.

A series of decisions have been made on government guarantees but they are taking shape slowly. In this case the issue is not even government, but simply banking procedures, because the government decided that when the bank is willing to lend, we will guarantee 50% without additional document checks. A proportion of these also get subsidies, and in individual cases they receive authorised capital. This is why in these cases the process runs like a conveyor belt; every week a decision is made on several businesses at once, and sometimes dozens are considered. I think these have been the main effects of the government decisions.

I would also like to report to you on the results of my trip to the G20 meeting. While there, I noticed several issues on which we need to make decisions at the government level.

One such measure is linked to the fact that we joined the forum on financial stability. Incidentally, it was renamed the Financial Stability Board at the G20, with the English abbreviation FSB.

Vladimir Putin: No matter what they do, they always end up with FSB.

Alexey Kudrin: This is an organisation through which we can really work out new control and oversight procedures and financial market mechanisms, and basically track the implementation of all the rules and demands on the financial markets.

Russia is the third-ranking member of this board. We are now preparing documents for our representatives, who will participate in all key meetings. Having joined this organisation, however, we must prepare ourselves for the adoption of a range of financial market standards in the near future, standards that are already in place in many other countries.

Secondly, in line with documents approved at the G20, we also have to prepare legislation on financial market control. In essence, these documents mean that the classification of financial institutions will have to be carried out more carefully: for banks, financial companies, and all who work in finance.

Vladimir Putin: Overall, this will make work in that sector more transparent and efficient.

Alexey Kudrin: It will make it more transparent and allow all clients, all citizens, who deposit their money, entrust their money to management, hold insurance policies and pensions, everywhere where there is a credit or financial risk... it will allow them to understand how likely they are to receive returns on these resources and at what percentage - the income from those financial tools. All these institutions must again be re-classified, the risk must be determined, and strict demands must be made of those who manage these institutions and risks.

In this sense, there are a whole range of financial tools that have appeared and are always unregulated. This is why it is vital that there be stricter supervision, classification, and so on, of all these new instruments, to make one set of rules governing these different markets in all these different countries. The international operations of large multinational companies require particular control, as they could for example be set up in some kind of offshore area that nonetheless operates in all markets, and which regulators still do not fully include in their operations, credit rating, or financial instruments. It has been suggested that a global credit history bureau will be established, in which any investor or simply citizen who wants to invest in shares in either Western or domestic companies can get accurate information about the risks involved, the companies, and their options.

Vladimir Putin: Mr Kudrin, are there any additional financial liabilities for Russia as a result of the agreements made at the G20 meeting in London?

Alexey Kudrin: At the moment, Russia has no obligations regarding the new resources, the one trillion, one hundred billion dollars, that the international community pledged to gather in support of countries that need help. We have still not declared our participation in this because we in the CIS are already putting a significant amount of effort into working out the reasonable ways that the Russian Federation can support those countries that are in our area. This was noted by the international community, including during the discussions that took place in London.

The creation of the $10 billion EurAsEc fund is also essentially the kind of support we are discussing. Our participation has also been noted, but there is the possibility that we will receive interesting offers regarding the allocation of our funds in securities - from the IMF, for example. These suggestions could seem interesting but we have not made any decision on this, and will follow the market conditions and the profitability of these measures. We continue to hold gold and foreign currency reserves in reliable securities. IMF securities are quite reliable, and, when we have examined the situation, we will be able to make a decision. At the moment, we have no obligations linked to IMF credit resources.

Vladimir Putin: Good, thank you.