Vladimir Putin: Good afternoon, colleagues.

Let us begin by exchanging current information. Ms Nabiullina, how are the preparations for the St Petersburg Economic Forum coming along?

Elvira Nabiullina: Work is going ahead full steam. I chaired a meeting of the Organising Committee in St Petersburg on Saturday to finalise the details on the spot. The programme of the Forum is ready. It will go on for two days, on June 5 and 6. June 5th will be an "Economy Day". June 6th will be a "Financial Day". We shall have plenary sessions and sessions devoted to various social and economic themes.

The focus, of course, will be on anti-crisis measures, on anti-crisis policy. There will be a chance to share the experience different countries have amassed in pursuing anti-crisis policy as well as opinions as to what the solutions can be for the post-crisis period.

The city is ready to host the Forum, all the facilities are ready and the Administration of St Petersburg is actively involved in the preparation for the Forum.

Vladimir Putin: How many participants do you expect?

Elvira Nabiullina: We are expecting about 2,000 participants. More than half of them are businesspeople. There will also be delegations from many countries, heads of state, ministers and academics. More than 500 heads of major foreign companies have confirmed their participation. So, it is going to be a fairly representative Forum.

Vladimir Putin: I think it will be an interesting and useful event.

Is Mr Fursenko here? I am aware that a Conference on Nanotechnologies has been held in Khanty-Manasiisk. Could you please tell us what specifically was discussed there and what the make-up of the conference was?

Andrei Fursenko: It was a somewhat unusual conference. We co-sponsored it with Rosnanotech and the International Association of Russian-Speaking Scientists. Our compatriots from 10 countries attended. The leading Russian regions in nanotechnology and leading countries gave presentations.

We discussed cooperation, heard reports about the most interesting areas and prepared a Memorandum together with the Association of Russian-Speaking Academics on creating a joint expert space and on joint work in the sphere of education and science and, of course, innovative projects. We agreed on the spot on concrete projects, in particular visits by scientists to various medical research centres in various Russian regions. For example, we have agreed that US scientists would come to the newly opened cardio centre in Khanty-Mansiisk. Meetings will be held in Belgorod and other regions. The meetings will be held by regions.

Vladimir Putin: Is it a one-off event or will it lead to regular contacts in this sphere?

Andrei Fursenko: The event is going to become permanent. The first such meeting was held in Marseilles last September. I delivered a report there. We agreed then that the next meeting would be held in Russia. Some of our compatriots wondered whether Khanty-Mansiisk was the best venue. Today they admit that it is the best place.

Vladimir Putin: They probably haven't been to Russia for a long time.

Andrei Fursenko: No, they were impressed not only by the scenery and the snowfall, but also by the high level of medicine, education and science. We have agreed to hold these meetings alternately in various countries and various Russian regions. Not in Moscow or St Petersburg, but in various regions. They suggested Kamchatka as our next venue, but I said that Kamchatka was a bit too far. I was more in favour of by Khabarovsk. There are several regions that are ready to play host. Nanotechnology is making good headway in Belgorod. And also in Siberia: in Novosibirsk and Tomsk. So, we will meet again in Russia a year from now. It is ongoing work. We have set up a permanent site where we will exchange information.

Vladimir Putin: All right, thank you.

Ms Skrynnik, grain interventions have been carried out. How much grain have we procured and how did it impact on the grain market in the country and our agricultural enterprises?

Yelena Skrynnik: I can report that the Agriculture Ministry has completed the procurement of grain from the 2008 harvest.

The state has bought 9.6 million tons of grain from farmers worth 46 billion roubles. It enabled us, first, to support the Russian grain producers, second, to stabilise prices in the grain market and also to lay the financial basis for the preparation of the agricultural complex for the spring sowing and for harvesting this year. We are also taking the necessary measures to prepare procurement interventions for this year's harvest. We have selected 472 elevators and we continue this work.

Vladimir Putin: How much grain will be available for export?

Yelena Skrynnik: So far the figure is 19 million tons. But that is not grain procured through intervention, it is the general market. So, that is more than last year, last year it was about 15 million tons.

Vladimir Putin: Yes, I know. Are you managing to sell anything in the European market, or is it out of bounds?

Yelena Skrynnik: With today's prices, it is not profitable to export to Europe. So, the situation is stagnant.

Vladimir Putin: That's in the European market?

Yelena Skrynnik: Yes, shipping Russian grain for export is less profitable for traders than last year. So, they take a wait-and-see attitude and do not exhibit particular enthusiasm.

Vladimir Putin: I see. I just met with our Belarusian colleagues in Astana. And we have a meeting of the Union State Council of Ministers this week to discuss all the areas of our cooperation. The questions our Belarusian friends raise are well-known. They mostly have to do with agricultural machine building. They want us to expand the opportunities for the sale of their farm machinery in our market. There are also problems connected with some groups of commodities. They also have to do with agriculture.

Yelena Skrynnik: Mr Putin, currently we have two agricultural machinery enterprises in Russia that assemble tractors produced in Belarus. Specifically, we receive 11,000 tractor components per year to be assembled at our enterprises. Therefore, I disagree with the complaints from Belarus that we do not purchase their agricultural machinery. Every year, we have 11,000 tractors working in our fields. These tractors are assembled in Russia, but produced in Belarus.

Vladimir Putin: As the components are imported from Belarus, you believe that we support Belarusian enterprises by purchasing their products?

Yelena Skrynnik: Precisely.

Vladimir Putin: What do you think about financing through our loans, the loans provided by our banks to finance end product purchasing? I mean purchasing Belarusian-made products, of course.

Yelena Skrynnik: It hard to obtain and control loans nowadays, therefore, the Agriculture Ministry's position is that we already import sufficient quantities of tractor components, which cover the market needs. According to our information, the Russian-assembled tractors purchased by Rosagroleasing have not yet been distributed to our agricultural producers. Some of them are in storage, waiting for the paper work to be processed, for advance payments, etc. Therefore, considering that we already assemble 11,000 tractors, I believe that loans would be better used for other purposes.

Vladimir Putin: In other words, we should use the loans to purchase domestic tractors and other agricultural machinery?

Yelena Skrynnik: Yes, domestic, tractors, harvesters, and other machinery.

Vladimir Putin: All right. Thank you.

Vladimir Putin: Ms Golikova, could you please report on the demographic situation?

Tatiana Golikova: Mr Putin, colleagues, you are probably well aware that we have been paying particularly close attention to the birth rate, as we are facing a challenging situation in this sphere. We know that in the previous years, thanks to the measures that we introduced and due to the social situation, we were able to steadily increase the birth rate, while decreasing the death rate.

Mr Putin, together with Rosstat (the Federal Statistics Service), we have analysed the 1st quarter data. So far, we have no reason to be concerned. The birth rate continues to grow, while the death rate is decreasing. In March, there were 151,000 births, 13.4% more than in March last year. The total number of births in the first quarter was 421,900, which is 15,000 more than during the same period last year. The number of deaths decreased by 19,900 or by 3.6%. The natural population decrease fell by 25% compared with the same period last year.

The death rate reduction was largely due to the decrease in the external causes of death. Road accident casualties have significantly decreased. It should be noted that the measures implemented by the Interior Ministry in the framework of the road safety programmes as well the Roads project of our own Ministry in the healthcare sphere, launched last year, have had their positive results.

In addition, the infant mortality rate decreased in the period between January and March of the current year. There were 374 fewer deaths, compared with the same period last year.

Overall, in the 1st quarter, we were quite successful in implementing most aspects of the National Healthcare Project. As far as project implementation, we are ahead of the last year's indicators. I would like to present some figures here. In the first quarter of 2009, 96,000 people had annual physical check-ups, while 212,000 people received in-depth medical diagnostics at their place of work. In addition, 5,800 orphans had annual physical examinations.

We have provided 30,940 patients with technology-intensive medical treatment. Unlike the previous years, in 2009 we have been actively bringing the technology-intensive medical facilities closer to the patients' place of residence. There were 28,651 technology-intensive surgeries performed at the federal government-sponsored medical facilities, and 2,289 surgeries at the facilities sponsored by the constituent entities of the Russian Federation.

In addition, we have significantly increased our assistance in the framework of the Birth Certificate programme. Traditionally, we have had very good indicators as far as the first and second birth tickets are concerned. These are the tickets provided to women at the pre-birth stage and during the delivery to provide them with appropriate assistance. Now we have increased the assistance by 62.9% for infants between the ages of six months and one year. This is a significant increase, which indicates that we have been paying increasing attention to the care of infants up to the age of one year. In fact, these measures have contributed to the results that I mentioned - the decreased infant mortality rate. This may not be a stable trend yet, but the measures that we have been taking definitely contribute to the reduction in the mortality rate.

Vladimir Putin: The high-tech medical centres we have opened are performing very well. They are very impressive. The centre I visited in Astrakhan performed over 100 heart surgeries in two weeks. This is very good.

As for the demographic programmes, we must keep their funding intact despite all the difficulties involved in the drafting of the next year's budget. It is perfectly obvious that these programmes produce results. They help us achieve our goals. Starting next year, women will be able to use maternity capital for the declared purposes. We must guarantee this at any cost.

Tatyana Golikova: I must say, Mr Putin, that the initial measure we adopted as part of the anti-crisis package - I mean the decision to allow the use of maternity capital for paying off mortgages and their interest rates earlier than planned - has suddenly produced quite impressive results.

We have assigned in the budget 27 billion roubles for 88,000 families. So far, 50,000 families have already sent in their applications. If I'm correct, 19 billion roubles are allocated for 50,000 families. We have already reviewed 46,000 applications, and allotted money for 22,000 families. To be precise, we have given six billion roubles to 22,700 families. In other words, this measure has been very much in demand. Many people have already used it and will use it in the future. It is enough to say that we have received 300,000 requests.

Vladimir Putin: Good. This means that our different programmes are able to help the families that have found themselves in a predicament. We should continue doing this. Mr Zhukov, you have just held a teleconference. What is the situation in the labour market?

Alexander Zhukov: Mr Putin, in the morning I conducted a nationwide teleconference on the state of the labour market and the implementation of regional programmes. Obviously, the main aim is to establish in more detail the scale of registered unemployment and implementation of the endorsed programmes by the region.

The consensus opinion is that the programmes have proved to be quite effective. They should be continued and upgraded. We know in what directions to develop them. This is the first point.

Second, the majority of the regions believe that we went through the worst times in March and April. Nevertheless, there are still some major problems to resolve, and we have pointed them out to the regions. First of all, it is necessary to employ the graduates of secondary and higher educational establishments.

The academic year is nearing completion, and for this reason we have paid particular attention to this problem. The bulk of the regions have rather detailed plans on providing graduates with jobs. This is the most important issue. It is followed by the development of small and medium-sized business.

This measure has featured prominently in the majority of regional programmes. In some regions, the number of registered small and medium businesses has gone up by 50%. They will create the biggest number of jobs.

The third most important issue is single-industry cities or strategic companies. The regions have paid particular attention to this issue, and have compiled specific plans for each of them, especially for those that are expected to lay off a large number of employees.

Generally, the programmes are working successfully in most regions. Some regions are lagging behind, and we have already taken note of that.

Vladimir Putin: As we discussed, next year is not going to be easy, and in this context it is necessary to provide funds for the continuation of these programmes, and probably for their extension.

Alexander Zhukov: Yes, Mr Putin, we will do this by all means, and will update the programmes to primarily help those who are setting up new production lines, creating new jobs, and modernising their companies to produce competitive goods.

Vladimir Putin: Good. We have drafted a decision on grants for young scientists. During two years, PhD's up to the age of 35 and Doctors of Science up to the age of 40 will receive grants of 600,000 roubles and one million roubles, respectively. Mr Ivanov, could you please comment on this in more detail.

Sergei Ivanov: Yes, Mr Putin, at the initiative of the Ministry of Education and Science all the relevant departments have compiled and accommodated a draft resolution of the Government to support young researchers and scientists.

This draft develops on the earlier decisions of the Presidential Council on Grants and its February decree on support of young Russian scientists.

As you have mentioned, the draft determines the procedure for allocating these grants on a competitive basis. Starting this year, 400 annual grants will be allotted for young PhD's. The draft clearly defines the age, which is to be up to 35. A total of 60 annual grants will be established for young Doctors of Science up to the age of 40. Needless to say, grants will be distributed on a competitive basis.

There is one more mandatory condition: The winners have to involve in their research other young scientists, postgraduate students, undergraduate students and PhD's. In other words, they should form a rather young team. This is indispensable.

As you have already mentioned, the annual grant is 600,000 roubles per PhD and one million roubles per Doctor of Sciences. All in all, the budget allocates 900 million roubles for this purpose. We believe that this will help reproduce academic and teaching staff in the most promising directions of research, for which we have a federal targeted programme.

The main thing is to attract young talented scientists who want to continue doing research and provide them with jobs in research organisations.

Vladimir Putin: Good. Now let us turn to today's agenda.

As you know, today Mr Medvedev gave his Budgetary Address.

I ask you to be prompt in your preparation of the Government's instructions on the implementation of its key recommendations and priorities.

I would like to emphasise the main issue: It is crucial to ensure macroeconomic stability and a balanced budget. This is a key prerequisite for successful solution of social and economic tasks at present and in the post-crisis period.

We will have fewer resources to rely on, this is clear to us today, but that being the case we also have to ensure that state functions and social duties are fulfilled, that we give an extra boost to private sector development and that economic activity increases.

In the coming months, as we prepare the budget, we will have to answer a series of difficult questions, singling out those projects that will be the first to be supported, and optimise the rest.

Also on our agenda for today is a discussion of the key directions for tax policy in 2010-2012. I remind you that the anti-crisis package included a significant reduction to the fiscal burden on business. I am referring to lowering the tax on natural resources production, profit, small business and so on. In total, this amounts to approximately 700 billion roubles that will remain in the economy.

Essentially, another very wide-ranging tax reform has taken place. Moreover, unlike those of past years, the taxes were lowered not in a growing market, but against falling world prices for energy resources, metals and chemical products. We faced falling prices and sales volumes across practically the whole range of our exports. Nonetheless, these tax reforms were carried out. We took that step consciously, offering the economy additional resources to support business activity and bolster growth.

At the same time, we need to securely guarantee the fulfilment of the tax system's fundamental function: ensuring the solvency of the state. For this we need to refine the administration of the tax system and cleanse it of all the well-known tax evasion schemes, which have become ever more sophisticated of late.

Of course, we will continue to carry out a liberal economic policy; however, there is a great difference between liberalism and fraud.

There is a long overdue need to resolve long-standing matters, such as tax control on the use of transfer prices, various kinds of hidden offshore accounts used for the illegal minimisation of tax paid and so on.

In addition, I particularly emphasise that future optimisation of the tax system will remain on the agenda. So, in 2010 the upper income allowance that allows small businesses to move to a simplified system of tax assessment will be increased from 30 to 60 million roubles. Although, as announced earlier, there will be no subsequent indexation. We see this as an anti-crisis measure.

Moving on. Other effective anti-crisis measures could also include extensions on tax payments and other measures that give a breathing space to businesses that find themselves in difficult financial circumstances.

We also need to continue to refine the administrative process by which many private matters are painstakingly resolved, matters that that nonetheless are serious problems for those who daily meet bureaucratic obstacles such as an excess of required documents, certificates, agreements and other "nonsense", all of which is nothing other than a simple opportunity for corruption.

Strengthening the tax system's incentivising role is as urgent an issue as ever, above all in order to resolve the Russian economy's key problems. This includes increasing the efficiency of natural resource exploitation, introducing energy efficient technology, encouraging innovative solutions in business and supporting companies' modernisation.

All these measures may not produce quick results, but today we must be working with the view to solving the issues of post crisis development.

Finally, we must support regional finances, and give them additional means of increasing their own tax base.

Apart from tax, there are some other important points on our agenda, including the report on budget spending for the 1st quarter of 2009.

Today this is far from being a theoretical question. In the conditions of serious budget deficit, it is vital that we take all possible steps to plan and implement the spending of economic resources rationally, and to improve the quality and efficiency of managing the network of state financed institutions. In addition, the agencies must be ready to be fully accountable for each rouble spent.

We must also consider three draft laws included in the Government's anti-crisis plan. I am referring to the introduction of special mechanisms for protecting the bondholder's rights and to a system of creating the share capital for businesses that allows them to attract more resources to commercialise their investment costs.

In addition, changes to this year's budget will be introduced. They should simplify the way strategic sectors are given state guarantees. We have spoken about this on more than one occasion, and the decisions have essentially already been made.

From now on, the banks can receive resources according to the guarantee, without having to wait for any other security for the overdue loan, and thus their risks are lowered. That means that loans will be more available for businesses. I hope this will be an effective measure. We have talked about this on several occasions, when discussing the solutions for problem industries where the banks either have to restructure the debt or adopt other liberal measures. There we always come up against the banks concern about timeframe in which they would get the money back on guarantee, if such circumstances apply. I think the changes to this system are a step to meet the financial institutions.

* * *

Colleagues,

I would like to draw your attention to one more important issue regarding the efficiency of Government work. We spoke about it not at all long ago.

As you know, the fiscal code lays out the timeframe for the introduction of the budget to the State Duma. This needs to take place no later than August 26. We have always sought to adhere to this norm as accurately as possible. The current situation on the world markets, and in the Russian economy, is changing very rapidly, and is difficult to predict. For example, in spite of the continuing adverse macroeconomic background, last month we saw an increase in oil prices on the global market. And now, as we have just heard from Mr Zhukov, there has even been some improvement in the situation on the domestic labour market. Although, this might not indicate a broader trend, there are, all the same, some changes.

The Ministry of Economic Development is asking for additional time for analysis, and to gather supplementary information, so it can produce a reliable and trustworthy forecast. I think this is well founded.

Similarly the Ministry of Finance, and the ministries for other sectors, are asking for extra time to help them complete a detailed reworking of the budget. It is vital that we facilitate an increased effectiveness of expenditure, that we produce a high quality, realistic financial plan.

It is obviously risky, given these conditions, to send the draft budget to the State Duma in August, that is four months before the beginning of the financial year. I think it is vital that this year we delay the introduction of the budget, until October 1. And I ask that the deputies in the State Duma and Federation Council work on this issue.

Let us now move to a discussion of the agenda.