The following issues are scheduled for discussion at the Government meeting on February 5, 2009:
1. Implementation of measures to improve the situation in the financial and some industrial sectors
Seeking to mitigate the negative influence of the global economic crisis on the Russian economy and prevent the development of crisis in it, the Russian Government is implementing the following measures aimed at developing the financial and banking sectors, and supporting industry and the people.
I. The Action Plan is the main comprehensive document that includes anti-crisis measures for different economic sectors. It is aimed at improving the situation in the financial and some industrial sectors. (Approved by Prime Minister Vladimir Putin in Resolution No 4863-p-P13 on November 6, 2008.)
As many as 15 federal laws, 23 Government resolutions, one Government executive order, and three bylaws have been approved as part of implementation of the Action Plan.
The Plan's measures can be divided into four main groups.
1. Measures to develop the financial and banking sectors and improve their efficiency, and to expand the financing of industry.
Federal Law No. 315-FZ, On Amendments to the Federal Law on Banks and Banking and Some Other Laws of the Russian Federation, dated December 30, 2008, was approved to improve the efficiency of the financial and banking sectors. The law aims at improving the procedure for reorganising commercial organisations, including lending ones, by banning the unconditional right of creditors to demand early repayment of debts in case of reorganisation.
The enforcement of the law will simplify the reorganisation procedure of Russian companies, including banks, create conditions for accelerating interdepartmental flow of capital, and streamline the reorganisation procedure in the form of mergers and acquisitions.
In addition, Federal Law No. 317-FZ, On Amendments to Articles 46 and 76 of the Federal Law On the Central Bank of the Russian Federation (Bank of Russia), dated December 30, 2008, was approved to strengthen control of the use of funds allocated to lending organisations for support of the Russian banking system.
The law gives the Central Bank the right to appoint authorised representatives to the lending organisations that take out loans, including subordinated loans, from Vnesheconombank and the Bank of Russia.
Federal Law No. 306-FZ, On Amendments to Some Russian Laws Due to Improvement of Procedure for the Recovery Proceedings against Mortgaged Property, dated December 30, 2008, gives creditors (including banks) the right to sign agreements with lenders on the recovery of mortgaged property (movable and immovable) and its sale without a court decision, and also provides a clear procedure for the sale of the mortgaged property.
2. Measures to support the labour market and provide social assistance to citizens, aimed at preventing the development of negative trends in the social sphere.
Federal Law No. 287-FZ, On Amendments to the Law of the Russian Federation On Employment, dated December 25, 2008, was approved to minimise possible negative consequences for the people.
The law stipulates the norm according to which the Government may, in case of crisis on the labour markets of individual regions of the Federation, take measures and draft plans to mitigate tensions on these regions' labour markets.
Government Resolution No. 915, On the Minimal and Maximum Unemployment Benefits for 2009, dated December 8, 2008, stipulates the minimum unemployment benefit at 850 roubles and the maximum unemployment benefit at 4,900 roubles.
3. Measures stimulating demand for economic sectors' products.
Federal Law No. 308-FZ, On Amendments to the Federal Law On the Placement of Orders for Goods, Work and Services for State and Municipal Needs, and to Individual Laws of the Russian Federation, dated December 30, 2008, seeks to stimulate the domestic demand for economic sectors' products.
Under the law, a federal body of executive authority responsible for legal regulation of the placement of orders (Economic Development Ministry) may approve conditions for allowing goods made in a foreign country/group of foreign countries, works and services done and provided by foreign persons to be considered for the placement of orders for the provision of goods, work and services for state and municipal needs not only in cases when a foreign country/group of foreign countries use the national regime for the commodities, work and services made in Russia or done and provided by Russian persons, but also in cases when the Government issues instructions to prioritise goods, work and services made in Russia or done and provided by Russian persons during the placement of orders for goods, work and services for state and municipal needs.
Order No. 427 of the Economic Development Ministry, On the Conditions for Allowing Goods Made in Foreign Countries for the Placement of Orders for Goods for State and Municipal Needs, dated December 5, 2008, stipulates a 15% preference rate of the price of the order for participants offering Russian-made goods compared with participants offering foreign-made goods.
This preference rate has been applied to the following groups of goods:
• agricultural goods;
• foodstuffs and drinks;
• textiles and clothing;
• organic and inorganic synthesis products, including medicines;
• metallurgical products;
• medical equipment;
• automobiles, auto accessories, and other vehicles.
The Order stipulates the procedure for applying the preference rate, including with due regard for auction specifics, and recommends that the auction documents should include relevant requests to auction participants to affirm that they offer Russian-made goods.
According to Government Resolution No. 24, On Additional Measures of State Assistance to Russian Exporters of Industrial Goods, Automobile Making and Transport Engineering Companies, dated January 14, 2009, as much as 6 billion roubles of federal allocations stipulated for supporting the Russian financial market in 2009 may be used to subsidise Russian exporters of industrial goods' interest payments on loans taken out to produce export-oriented goods.
To maintain the competitiveness of Russian producers, the Government has raised the import customs duty on metallurgical, chemical and engineering goods and several kinds of foodstuffs, cut the poultry meat and pork import quotas, and raised the customs duty on poultry meat and pork supplies above the quota.
Seeking to cut outlays on the acquisition of imported goods that are not produced in Russia or are produced in insufficient amounts, the Government has cancelled or cut import duties on equipment for the metallurgical and gas sectors.
To ease pressure on exporters, it has been decided to cut export duties on nickel and copper to zero, and to suspend the decision to increase duties on timber.
4. Measures to stimulate supply (production) of industrial goods and to strengthen the financial position of the country's leading economic sectors.
Federal Law No. 324-FZ, On Amendments to the Federal Law on the Federal Budgets for 2009 and for the Planning Period of 2010 and 2011, dated December 30, 2008, gives the Finance Ministry the right to provide state guarantees on loans taken out by strategic defence enterprises for their operation and capital investment in the amount of 100 billion roubles, and on loans taken out by companies, selected in accordance with the procedure established by the Government, for their operation and capital investment in 2009 in the amount of 200 billion roubles.
Federal Law No. 310-FZ, dated December 30, 2008, approves amendments to slash the time needed to take decisions on the provision of state guarantees. The chances concern the maximum size of state guarantees that may be approved by the Finance Ministry in cases stipulated in the federal law on the federal budget for the corresponding year and planning period, and Government acts approved in accordance with it.
The Russian Government approved Resolution No. 24, On Additional Measures of State Assistance to Russian Exporters of Industrial Goods, Automobile Making and Transport Engineering Companies, dated January 14, 2009, which stipulates the provision of subsidies to Russian automobile and transport engineering companies for the repayment of part of interest on loans taken out from Russian lending organisations in 2008-2009 for retooling, worth 2.5 billion roubles.
Federal Law No. 224-FZ, On Amendments to the Federal Law on Amendments to Parts 1 and 2 of the Federal Law of the Russian Federation, Part 2 of the Tax Code of the Russian Federation, and Individual Laws of the Russian Federation, dated November 26, 2008, was approved to ensure finance assistance to defence enterprises by encouraging the issue of investment loans to the said enterprises. Clause 7 of Article 1 of the said Law approves additions to Article 67 of the Tax Code stipulating reasons for the provision of investment tax loans to companies implementing state defence orders.
Measures for the agricultural sector include:
• an increase of interest rate subsidies for agricultural loans to 100% of the refinance rate (Federal Law No. 318-FZ, On Amendments to Articles 11 and 18 of the Federal Law on Agricultural Development, dated December 30, 2008)
• an increase of the charter capital of Rosselkhozbank and Rosagroleasing in 2009.
II. Government Resolution No. 957, dated December 15, 2008, stipulates the establishment of the Governmental Commission on Sustained Development of the Russian Economy to monitor the implementation of decisions on improving the situation in the financial and other economic sectors, provide comprehensive analysis of the situation, and determine avenues for economic development.
The Commission will, in part, draft measures to support economic sectors in order to stimulate the production of competitive goods (work, services), determine the size of allocations for improving the situation in the financial and other economic sectors, protect the domestic market (including through the use of customs tariffs and price regulation), and ensure sustainability on the monetary, financial and currency markets and in the banking sector.
III. Assistance to individual enterprises will be additionally considered in relations with strategic organisations the list of which was approved by the Commission's decision on December 23, 2008. The list includes 295 organisations.
The list is not exhaustive and may be amended by decision of the Commission.
Being on the list of strategic organisations is not a guarantee of financial assistance. The goal of working with strategic organisations is to support their stability and, when and if necessary, to minimise the negative social and economic consequences of their closure.
By decision of the Commission, strategic organisations are distributed among branch ministries. To ensure continued monitoring of the financial, economic and social situation in a given organisation, the responsible branch ministry will set up a working group comprising representatives of the Finance Ministry, the Economic Development Ministry, and the Regional Development Ministry, the partner bank (VTB, Sberbank, Rosselkhozbank, or Vnesheconombank), the administration of the region where the said enterprise is located, and the enterprise's management.
The working group will monitor the implementation of state measures and assistance, including the use of allocations.
To ensure interaction between the federal bodies of executive authority and executive authorities of the constituent entities of the Russian Federation during the discussion of proposals for the meetings of the Commission held to review the list of strategic organisations and to draft measures for ensuring the sustained operation of the organisations on the list, Order No. 7 of the Economic Development Ministry, dated January 17, 2009, stipulates the establishment of an interdepartmental working group to monitor the financial and economic situation of organisations on the list of strategic organisations.
As of January 30, 2008, the said group has held six meetings to discuss 15 strategic organisations in power generation, coal mining, water transport, the automotive industry, agriculture, and construction.
Work has been done to draft a list of strategic organisations of regional importance, including principal employers in one-company towns. Regional working groups made up of representatives of major banks, working under the supervision of the Regional Development Ministry, will monitor the financial and economic situation of strategic organisations of regional importance. Measures of state support of the regional level will be taken to improve the said organisations' sustainability.
IV. To solve specific development problems of individual economic sectors and fine-tune the instruments of state assistance to the given sector, the Government will draft and implement additional anti-crisis measures to support the development of the economy and the leading sectors most susceptible to shocks on the financial market and deteriorating loan conditions, which will help to maintain the speed and quality of economic growth in conditions of the global financial crisis.
The implementation of the above measures in combination with prompt discussion and approval of legal acts by the concerned federal bodies of executive authority and the Government will ensure prompt reaction to changes in the Russian economic situation and help to prevent the development of crisis trends.
2. The draft concept and plan of measures to create an international financial centre in Russia, and on the establishment of a Government Commission on the Creation of an International Financial Centre
I. A concept of creating an international financial centre in Russia was drafted in accordance with the President's Instructions No Pr-1961 and No Pr-2195, dated September 17 and October 17, 2008, respectively.
The draft is based on the results of analysis of the current situation in the Russian financial market and the global experience of setting up international financial centres. Comparison of the Russian financial market and the world's largest financial centres showed that Russia is lagging far behind and needs to develop its financial market and business infrastructure by doing the following:
• form a transparent and flexible system of management embracing all elements of financial markets, including the taxation system;
• develop an effective financial infrastructure, increase the range of available financial instruments and spur the growth of institutional investors;
• integrate the Russian financial market into the global markets;
• form a comprehensive competitive employment market in the financial sector, including by attracting foreign professionals;
• develop the business and non-financial infrastructure in Moscow;
• formulate the brand of Russia as a financial centre and encourage the growth of investors' trust in it.
The draft concept offers a general strategy of actions to create an international financial centre in Russia. It consists of two phases: development of the national stock market and its integration into the regional financial infrastructure (leadership in the CIS, until 2010); boosting Russia's competitiveness on the global level, development of the Russian financial market as a regional international financial centre, and a leading Eurasian centre (2010-2012).
The priority laws needed above all for creating an international financial centre in Russia are the laws on exchanges and exchange trading, on clearing operations, on securitisation, and on preventing illegal use of insider information and market manipulation.
Amendments should also be made to effective laws regarding the regulation of financial derivatives and pledge relations, establishment of a centralised system of registering securities, modernising corporate law, and improving the judicial system, including by establishing a specialised financial court in the system of commercial courts.
It is also planned to amend tax legislation.
To increase the reliability and stability of the Russian banking system, the Government is considering changing legislation to include the norm of individuals' irrevocable deposits and nominal bank accounts, to simplify the procedure and lower the costs of issuing lending organisations' securities, and to create an organised market (trading floor) for inter-bank lending.
To boost the development of the Russian insurance market, insurance legislation should be adjusted to international standards in order to increase the range of insurance products and services and the volume of insurance transactions, promote accumulation life insurance and insurance of responsibility for the fulfilment of contractual obligations, and strengthen the capitalisation and quality of Russian insurers' assets.
Measures are proposed to expand the possibilities for investing people's savings and the funds of corporate clients (non-state pension funds, insurance companies, and investment funds) in Russia issuers' securities, and to strengthen the role of independent Russian and international rating agencies in information support and regulation of financial markets.
It is also important to simplify the regime for the access of foreign assets to flotation and placement in Russia, to lower the cost of working in the Russian market through foreign depositories, to simplify access of foreign players to organised trade, to remove obstacles hindering Russian institutional investors' investment abroad, and to lower risks through international diversification.
To develop the labour market, the Government should draft state standards of educational programmes in the sphere of finance, and encourage the development of corporate training programmes. In addition, measures have been proposed to simplify visa procedures and the procedure for receiving work permits for foreign professionals.
According to the draft concept, the creation of an international financial centre provides for the presence of social and business infrastructure corresponding to international standards. In the foreseeable future, the operation of such an international financial centre will be focused on Moscow, which highlights the development of the office, housing, transport and IT infrastructure in Moscow.
The concept formulates the following tasks for the Russian financial sector in the short term (until 2010):
• to ensure the presence of CIS issuers stocks and bonds on the Russian exchanges;
• to commission mercantile exchanges for financial derivatives of the key groups of commodities (such as oil and oil products);
• to develop the payments system of the Bank of Russia by involving all lending organisations that meet the requirements in the system of electronic bank payments, and to create an interface for such payments using the SWIFT code system.
In the medium term (until 2012), the Russian financial system should satisfy the following requirements: a Russian exchange must become one of the world's top 12 exchanges by turnover and the volume of stock and bonds placement; the share of foreign securities in the exchange turnover must be at least 10%; and the share of the financial sector in GDP must grow to at least 6%.
II. The draft concept of creating an international financial centre in Russia was discussed and approved, in general, at the November 24, 2008 meeting of the Presidential Council on the Development of Russia's Financial Market.
In accordance with the instructions issued to the Economic Development Ministry, the Finance Ministry, the Federal Financial Markets Service and the Bank of Russia, the draft concept has been improved and complemented with a list of priority laws needed to create an international financial centre in Russia, reasons for creating a Government Commission on Financial Markets have been provided, and the structure of the draft concept has been specified.
The basic elements of the plan to create an international financial centre in Russia should be implemented within five years.
III. The provisional plan of measures to set up an international financial centre provides for drafting over 40 federal laws and a large number of legal acts, including acts of the Bank of Russia.
IV. The Ministries of Finance and Economic Development submitted a joint proposal on the establishment of a Government Commission on the Creation of an International Financial Centre.
The Commission should do the following:
• coordinate the efforts of the federal bodies of executive authority to create an international financial centre in Russia;
• consider draft federal laws and other legal acts on the development of the financial market and the creation of an international financial centre in Russia;
• monitor and control the implementation of measures to create an international financial centre in Russia.
3. Introduction of temporary rates of import customs duties on certain types of pipes
This draft resolution stipulates cancelling import customs duties on large-diameter cement lined pipes imported for the construction of the Nord Stream gas pipeline for nine months.
4. Approval of the Regulations on Granting Federal Budget Subsidies to the Constituent Entities of the Russian Federation for Developing Social and Engineering Infrastructure in Constituent and Municipal Entities in 2009
The said draft resolution submitted by the Regional Development Ministry stipulates the provision of financial assistance to federation members in the form of subsidies for the development of the engineering infrastructure (gas, heat, water supply and discharge systems, and sewage purification) and the social infrastructure (preschool establishments, general schools, and healthcare establishments), as well as for the provision of amenities to urban settlements.
Note: The Federal Law On the Federal Budget for 2009 and for the Planning Period of 2010 and 2011 stipulates the allocation of subsidies for the development of the social and engineering infrastructure in the Federation constituent entities, including 10.6 billion roubles in 2009, 11.5 billion roubles in 2010, and 11.4 billion roubles in 2011.
The daft provides for allocating 70% of total spending stipulated in the 2009 budget for co-financing social and engineering infrastructure projects in the regions, with the remaining 30% to be used to co-finance the provision of amenities to urban settlements. The said measures will be complemented with additional efforts to ease tensions on the regions' employment markets.
Subsidies for the development of the regions' social and engineering infrastructure will be provided to the budgets of the Federation constituent entities whose imputed fiscal capacity is not above the country's average.
Subsidies will be provided to the budgets of Federation constituent entities whose regional and local budgets include expenditure obligations and have requisite funds, action plans for the conversion of general schools to normative per capita financing, and the issue of social allocations in cash to people for the payment of rent and communal fees.
The draft resolution stipulates that the level of co-financing the social and engineering infrastructure cannot be lower than 40%, and the level of co-financing the provision of amenities to urban settlements cannot be lower than 80%. At the same time, co-financing of expenditure obligations from the federal budget cannot exceed 95%.
The draft also stipulates a system of target indicators to be used as the basis for evaluating the effectiveness of using subsidies.
5. Approval of the Regulations on the Coordinating Council of the Programme of Fundamental Research at State Academies of Sciences in 2008-2012
The drafting of the Regulations on the Coordinating Council is stipulated in the Programme of Fundamental Research at State Academies of Sciences in 2008-2012 approved by Government Resolution No 233-r, dated February 27, 2008.
The draft Regulations on the Coordinating Council defines its status, composition, main functions, and the procedure for its operation during the general guidance of the Programme's implementation.
6. Submission of the Agreement Between the Member States of the Shanghai Cooperation Organisation on Joint Military Exercises to the Russian President for subsequent ratification
The provisions of this Agreement regulate international legal issues of preparing for and holding joint military exercises by the member states of the Shanghai Cooperation Organisation, and stipulate the legal and organisational foundations for the interaction of the military groups of the Parties' armed forces.
The implementation of this Agreement will not entail additional spending to be covered by the federal budget, because these joint military exercises will be financed at the expense and within the limits of the funds stipulated in the federal budget for the respective year for the maintenance of the Russian Armed Forces and the Interior Troops of the Russian Interior Ministry.
Moscow
February 4, 2009
* Press releases by the Department of Press Service and Information contain the materials submitted by the executive federal bodies for discussion by the Presidium of the Government of the Russian Federation.
