Alexei Kudrin's opening address:
Good afternoon, esteemed colleagues.
We have convened this annual meeting to summarise a problem-laden year in Russian and world economic history. Its results show our readiness to face challenges and accidents.
I regard the establishment of the federal treasury among our country's top achievements. The treasury has worked uninterruptedly throughout these years to meet relevant public needs. As I remember, I warned all at the very beginning of the crisis that the system of servicing all client accounts of government-financed companies and agencies established by the treasury should guarantee fail-safe wage payments and meet all clients' needs. Payments are never suspended. Commercial banks were hit by the 1998 crisis to lose government funds. This situation will never repeat. We have necessary guarantees against it now.
When I said it, I was not quite sure that our financial and banking system would weather the crisis. The finance ministry and the treasury were the first to support banks at the end of 2008. We placed temporarily idle assets on banking deposits without pledges, however unusual such practice might be.
Bank liquidity was a must at that time because banking transactions were necessary. Russia suffered a strong capital outflow: more than $130 billion in 2008 and $52 billion in 2009. In 1998, the outflow of mere $10 billion upset the entire national finance to cause a default and huge rouble devaluation. Now, we have survived an outflow of 130 and another 52 billion dollars.
Liquidity was channelled into the national economy. The entire system was working without a hitch, and not a single agency had any problems with servicing and meeting its obligations. We did all we could to guarantee recipients' prompt and regular access to funds. We made all ministries and agencies work quicker. The treasury personnel were among the pillars on which government policy rested at that time. The treasury did a fine job up to the latest standards. I feel obliged to say it now, and I am sure that it will not sleep on its laurels.
A package of bylaws regulating the performance of the treasury and the budget system entered into force last year. Federal executive bodies have been reorganised as far as the treasury is concerned. Compliance with the federal budget is permanently monitored. There was a time when I made relevant weekly reports to the prime minister.
Now, we can make online assessment of budget compliance for all ministries and agencies. As I was addressing the government presidium meeting yesterday, I drew preliminary results of January 2010. I said that, if I was not mistaken, we had brought all allocations to recipients by December 7, and they started immediately to bring the funds down to subordinate agencies and companies. They began tenders and contract drawing. The results are here for all to see: ministries and agencies have not received mere 22.9 billion roubles for today, or 0.2% of the entire federal expenditures.
This is a record-setting year: we have never yet been so prompt with funding. Ministries and agencies have distributed 46% of allocations between their recipients for today, and contracts have been made for another 32.7%. No previous December and January have seen such dynamic activity. Several ministries are performing excellently. The Ministry of Industry and Trade has made contracts for 74.5% of its entire expenditures, the Ministry of Natural Resources for 66.4%, and the Ministry of Transport 44.5% by February 1-not bad for this year. We stand to gain if the trend persists and ministries and agencies' work with funds retains its dynamism.
Last month, we used roughly 270 billion roubles more than in January 2009. Even despite growing expenditures, the budget surplus amounted to 66 billion roubles by January's end. However, this is a relative surplus: we know that basic expenditures lie ahead, and revenues will increase far slower than expenditures.
I want to pinpoint the part of the report by Mr Roman Artyukhin, head of the federal treasury, which concerns strategic management. I attach great importance to new approaches to corporate management, which the treasury is introducing. I agree that the treasury's duty is to streamline payment, accounting, monitoring and information systems in the financial activities of public law entities.
It is our duty to make all our activities explicit to our clients and the public who use relevant information to see how Russia is doing and how the state is spending taxpayers' money. I think we have more opportunities to do so today, and I want this year to bring the arrangement to final success, and enable the key personnel of ministries and agencies to use the system, which provides a comprehensive idea of public finances and the fulfilment of pivotal government duties. The treasury will provide this new opportunity step by step this year, and the first relevant jobs have been created already.
One of the principal tasks is to enhance the effect of budget expenditures. We must work for it uninterruptedly and plan our outlays with the utmost precision. What we need is meticulous account for every rouble we spend with respect to its effect. Expenditure/result accounting should be modified. Later on, the treasury information system will help us to analyse the effectiveness of all expenditures down to the smallest detail, and so take stock of related practical achievements.
To set up a unified and integrated information system of public finance management is the government's strategic objective. The federal treasury infrastructure will allow us meet the target in the near future, when we cannot afford to build up expenditures and have to increase the effect of every kopeck we spend. That is why the Finance Ministry grants support to the federal treasury initiative for broad public access to the key efficiency indices of budget performance.
I feel obliged to stress the treasury's payoff function once again. We should introduce sophisticated banking technology, use plastic cards in funding state-financed companies and agencies, and minimise cash turnover. I want also to mention the federal law on amending certain legislative acts to improve the legal status of government and municipal agencies. The State Duma is considering the bill. The acting legislation should be brought into sync and new regulatory acts drawn in this connection. We should also provide other measures to guarantee the opening and servicing of client accounts of new government-financed companies and agencies, which is a newly introduced federal duty.
I think this meeting will discuss this law and the new government-financed agencies. Our ordinary budgeted agencies are being transformed. We will no longer set them financial targets. We will subsidise them. Managerial rights of using budgetary and extrabudgetary funds will expand. Monitoring and other our relations with such agencies will change according to the new law.
This is an approach we worked out when planning a separate wage bill, and particular clauses for the upkeep and duties of concerned agencies, whether in education or healthcare. Formerly, it was up to ministries and other central offices to set them financial targets and supervise certain managerial aspects.
Now that we shift to subsidising agencies according to government targets set them, the approach to their management will change radically. It demands new thinking. We should take stock of agencies whose government funding can be preserved and of those to set afloat in the market and purchase their services.
I think we are crossing a border in understanding the budget system, and the new law is sure to introduce a conceptual change in some approaches to its management. We should learn to plan targets we set to government-funded agencies, plan their subsidies and the principles of their revision due to inflation and other factors to reckon with.
We should orient our subsidies on desired results, and condition them by high efficiency. This is a challenge to the Finance Ministry and all ministries and other central offices with the respect to their subordinate agencies. A system that will allow see and plan the process matters to us tremendously. I stress once again that we are in for a huge preparatory job before we start implementing the new law.
I might go on enumerating the treasury's pivotal targets. I am convinced that we will have a detailed discussion of every aspect of the new regulatory base, the new objectives to enhance the effect of budget expenditures, modernised management of these expenditures through the new information system, and expanding the field of treasury work.
I wish you every success.