Working Day

15 september, 2008 15:00

Prime Minister Vladimir Putin chaired a meeting of Russian Government Presidium

Prime Minister Vladimir Putin chaired a meeting of Russian Government Presidium
"Finance Ministry intends to allocate additional funds to minimise the negative impact of what is happening on the world markets. <...> Starting in April, part of the temporarily available funds will be placed in bank deposits, which is a measure to support the national banking system today."
Vladimir Putin
Meeting of Russian Government Presidium

Vladimir Putin: Good afternoon. Is Igor Levitin here? Mr Levitin, could you tell us about the investigation into the Boeing 737 crash and the support being provided to victims' families. 

Igor Levitin: Mr Putin, members of the Government Presidium, a governmental investigative commission, comprised of members from all related federal executive bodies, arrived at the crash site yesterday. The fire was put out at once, with the Emergency Situations Ministry teams arriving at the site within a few minutes. The wreckage area was cordoned off by Interior Ministry officers, with 150 investigators working. As a result, the railway line, where a total of 12 trains had been delayed, resumed work.

Yesterday, we met with the crash victims' families in Perm's cultural centre. They were treated by psychologists from the Emergency Situations Ministry, who arrived on the site at 1 p.m. to offer the relatives psychological support together with officials from the Health and Social Development Ministry. Another 26 family members arrived in Perm this morning. Overall, there are 60 Perm residents and 50 people who have come from other cities and towns, among relatives. 

As for those victims' relatives living outside Russia, not all of them have contacted the governmental commission so far. We have initiated contacts with them through the Foreign Ministry and the embassies in the following way: they do not have to arrive here physically and can provide their blood samples for DNA tests at their home towns by permission from investigative agencies, while those who wish to arrive in Perm will be provided with visa assistance from the Russian Foreign Ministry at the Sheremetyevo airport.

At the governmental commission's meeting with the victims' families, we addressed all their requests and spoke about the work we were going to do. Today at 3 p.m. Moscow time, the police will take charge of the crash site and access to the cordoned-off area will be resumed. To meet the relatives' requests, we have provided them with the opportunity to spend some time at the wreckage site.

Today, the forensic experts will finish their work with the victims' relatives and taking DNA samples. We have told the relatives the blood samples will be taken to Moscow for establishing blood relations with the victims, which will take about three or four weeks. Those family members who live in Perm will wait for the test results here, and those who live in other cities and towns will go back to their homes and we will keep in touch with them.

At the moment, we are negotiating with the regions' authorities, who will start providing assistance to the victims' families beginning from the day the DNA test results are ready. The Perm Region Governor has helped to organise the work of federal executive bodies in the region and provide accommodation for the victims' families and those involved in the work.

A technical commission is currently carrying out an investigation into the accident. The Emergency Ministry officials have found flight data recorders, which were delivered to Moscow yesterday and will be examined by the investigators today. Since Boeing 737 is a US-manufactured model, representatives of the company requested to participate in the investigation. Representatives of the engine producing company will take part in the investigation as well. They will join our technical commission to examine the issues together. So far, we cannot say what has caused the plane crash, since the only thing available are the recorded conversations of the crew with the air traffic controller, which we are working on at the moment. We will start examining the remains of the plane after we decipher the information in the data recorders.

A governmental commission is currently working on the site, with two emergency centres launched at Moscow's Sheremetyevo and Perm's Bolshoye Savino airports. The victims' relatives are maintaining contacts with the governmental commission, with phone helplines working. Aeroflot is transporting the victims' families to the site. According to the decision of the Russian Government, the minimum compensation paid to the families will be two million roubles for each person killed in the crash, while the regional administrations will cover all funeral expenses.

This is the current state of events.

Vladimir Putin: Thank you. Mr Shoigu, what has the Emergency Situations Ministry done so far?

Sergei Shoigu: We started work minutes after receiving information about the plane crash and arrived at the wreckage site promptly. An hour and a half after the accident, the total number of resources concentrated in the area reached over 1,800 people and 100 vehicles. First, we concentrated on finding the flight data recorders, and we delivered them to the Transport Ministry that afternoon. After that, we initiated joint efforts with the Interior and Transport Ministries to place the plane fragments in a special facility and attempt to put all details together and look into what might have caused the crash.

Special emergency operations centres were set up at the Sheremetyevo Airport and at Aeroflot offices, an operative group is working at the Transport Ministry, and an interagency group has been set up in Russia's Crisis Management Centre made up of officials from the Interior, Foreign and Transport Ministries.

Most of the work was completed by 6.45 p.m. yesterday, with the railway traffic in both directions resumed at 6.50 p.m. We expect to finish collecting body parts and the plane fragments after 3.00 p.m. today. The debris is scattered over an area of 10,000 square kilometers.

That's all so far.

Vladimir Putin: (Addressing Transport Minister) Mr Levitin, keep an eye on this and report on the results later on.

Igor Levitin: I will.

Vladimir Putin: Ms Nabiullina, will you report on the rates of the national industrial production for the first eight months of the year.

Elvira Nabiullina: In August, Russia's Federal State Statistics Service provided data on the country's industrial development. For this year's first eight months, industrial production has shown a 5.3% growth as compared with the same period in 2007. In August, the rates increased by 4.7%, while July's growth was 3.2%.

The manufacturing industry has been showing growth rates higher than average for national industry. For the first eight months, the increase reached 7.6%, including August's growth of 6.5%. The manufacturing industry indicated a 4.6% increase in July, as compared with the same period in 2007.

I would also like to note the increasing rates in mineral mining production, with August's growth of 0.7%. Just to remind you, in July the country's mineral mining industry showed a 1.8% decrease, which means the indicators are improving. Overall, the statistics shows rather positive dynamics, with the growth rates higher than in July.

Vladimir Putin: What is the personal income growth for the period?

Elvira Nabiullina: We have not received the new statistics on personal incomes yet.

Vladimir Putin: And what about the income growth for the first six months?

Elvira Nabiullina: It was about 13%.

Vladimir Putin: Do you mean wages or the average income?

Elvira Nabiullina: This is the people's average income. As for the real wage, it showed an 11.6% increase in July, while for this year's first seven months the growth was 12.7%.

Vladimir Putin: Good, thank you. Meanwhile, the Finance Ministry is suggesting additional measures to sustain bank liquidity. Mr Kudrin, will you elaborate on this?

Alexei Kudrin: Mr Putin, the Finance Ministry and the Central Bank of Russia have been watching the situation carefully, considering the current state of financial markets. We are monitoring capital outflows and inflows, holding consultations with major banks and analyzing the interbank services market.

Vladimir Putin: Will the bankruptcy of a major U.S. bank (Lehman Brothers) affect our financial system? I hear they are going to sell Merrill Lynch as well.

Alexei Kudrin: Mr Putin, in the current tense situation on the global financial markets and with ongoing capital outflow from developing markets, not only Russian-based, this will definitely have a certain impact. That is why I see our task in providing a timely response by supporting our financial system with all the necessary means.

The Central Bank of Russia has enough assets to sustain its liquidity on the market. This year, we will implement everything we planned to increase financial and credit resources and credits for the real economy sector. Considering temporary fluctuation, we have agreed on expanding the Bank's tools. At the moment, temporary surplus funds are being placed by Russia's Federal Treasury, with the current limit of 668 billion roubles. In the several months since we introduced it, the banks have placed 186 billion roubles, the limit's major part remaining - but making advances to banks, which are expecting a certain aggravation of the situation with October's tax payments and external debts payments, we...

Vladimir Putin: This is a routine problem, isn't it?

Alexei Kudrin: It absolutely is. In this regard, we are increasing the limit from the current 668 billion to 1.232 trillion roubles.

Vladimir Putin: Is this linked to the increased difficulties with lending, which is currently observed on the Western markets?

Alexei Kudrin: Yes, lending has become more difficult. The national real sector needs funds to support its loans, both long-term and medium term, which is the reason why we are increasing the limit that we suppose will not be used in its entirety. Yet, banks should be aware that in case of emergency they can apply for one-week and five-week auctions within a week to receive liquidity and further finance it as they require. The Central Bank of Russia is increasing the scope of its tools as well, so all these measures should be sufficient to support liquidity.

While considering current activities and statistics related to capital outflow, we should bear in mind that these figures include not only capital disinvestment but also the currency difference. Besides, there is also the fact that while expecting payments and supporting their currency clients, Russia's banks reserve foreign exchange holdings outside Russia, which is in line with the national legislation. These are our foreign currency holdings.

At the moment, banks have expediently reduced their debts to the external sector but have increased foreign currency reserves to serve their clients, which shows that the situation is quite standard and kept under control.

Vladimir Putin: Good. Ms Golikova, the Health and Social Development Ministry is involved in re-establishing oncology centres and has initiated a special programme. Will you elaborate on this, please?

Tatyana Golikova: Developing the oncology service in Russia is planned from January 1, 2009 as part of a middle-term national programme to expand the national health sector, within the budget project introduced to the State Duma. Its development is a priority, as the cancer death rate in Russia ranks second after the cardiovascular diseases, reaching 13.8%. As of January 1, 2008 a total of 2.5 million people were officially registered in cancer care centres, with 200,000 people becoming disabled due to cancer diseases, which is 14% of all disabled in Russia - the statistics speaks of the necessity to solve this serious issue.

The programme is estimated at about 28 billion roubles, with 6.3 billion to be allocated in 2009. The Health and Social Development Ministry has chaired a meeting with leading cancer specialists and officials from regional administrations. Overall, the programme will involve Russia's 11 constituent entities, with 10 regional centres and a district cancer centre planned to be launched. Besides, support will be granted to two federal medical centres which provide specialised cancer treatment.

Russia's regional administrations have been ordered to register all cancer-related centres in their territories, and I hope that in the near future we will pick out those 11 which will participate in the programme in 2009. We expect the programme to reduce deaths caused by cancer by 4% by 2012 and promote earlier cancer diagnosis. At the moment, patients are diagnosed with cancer mostly at stages III and IV, with high relative risk of dying and expensive medical and drug treatment required. That is why we consider the initiation of this programme in 2009 to be the most important factor in increasing the life span for Russian people.

The programme will be implemented in stages, depending on the preparation level. As a result of the cancer-related centres' registration, we are determining their material and technical resources, as well as cancer detectability. Another important factor is the availability of the centres' human resources, since mere installing up-to-date equipment is not enough, as specialists should be able to use it and provide appropriate oncological treatment. As soon as the information is provided, we will start work on preparing Russia's regions for the participation in the programme. In the next few years, we plan to include 83 constituent entities in the programme.

Vladimir Putin: Good. Mr Zhukov, during our visit to the Russian Far East some time ago we addressed you as a state representative in the Russian Railways company and spoke about the need to make sure that school and university students keep their monetary benefits in long-distance and suburban trains, and have developed certain ways to tackle this issue.

Alexander Zhukov: Yes, after our talk, the company's Board of Directors passed a decision to keep monetary benefits for school and university students, as well as technical college students, which means preserving the 50% discount in long-distance and suburban trains.

Of course, keeping such reduced prices would mean losses for the Russian Railways. The company requested me, as a government official, to address the Government to find ways to compensate the gap in the company's income. This could be done in various ways, such as to keep a part of dividends in the company's assets.

Vladimir Putin: You mean that the part of the state-owned dividends will be returned to the company to compensate for the losses?

Alexander Zhukov: Yes, that is a possible option. The Government will make a compromise decision on reducing the dividends to be allocated to the budget income.

Alexei Kudrin: Our Ministry has also developed the options for solving this probleml. What Mr Zhukov has proposed is one of those alternatives. We will find the solution anyway.

Vladimir Putin: Good, thank you. Now let's proceed with the agenda.

Today, we will consider the federal budget execution and the implementation of the federal target programmes for this year's first six months.

I would like to note that the 2008 budget is being executed smoothly and according to the planned schedule. The budget surplus amounted to 1.4 trillion roubles in the first six months, while the Reserve Fund assets reached 3.1 trillion roubles and the National Welfare Fund amounted to 770 billion roubles.

This shows that our budget system has reached a considerable financial safety margin, which makes for minimising the negative impact of the instability of the world financial markets and fluctuation of raw materials prices. Mr Kudrin has just mentioned this, saying the Finance Ministry intends to allocate additional funds to minimise the negative impact of what is happening on the world markets. I will add that all decisions on adjusting budget revenues and expenditures to compensate for price growth were adopted on time.

Moreover, now we are able to control our monetary reserves in a more flexible way. Starting in April, part of the temporarily available funds will be placed in bank deposits, which is a measure to support the national banking system today. We also know that the Finance Ministry has planned to increase these funds.

The statistics on the federal target programmes' implementation is overall positive as well. This year's allocations for the federal target programmes reach 682.5 billion roubles, with 206.8 billion roubles (30.3%) allocated in the first six months. This is more than in the corresponding period of 2007.

I would highlight the programmes for developing the national transport system and increasing soil fertility, as well as the federal space programme.

However, I would also like to emphasise several problems in implementing federal target programmes.

Due to the amendments to the Budget Code, the order of financing state investments is going through changes, which requires adjustments to subordinate acts and guidance materials. I request that the Finance and Economic Development Ministries together with other government agencies should complete this work in the nearest time and adopt decisions on newly started projects in advance to avoid any delays with financing and termination of activities on construction sites in the beginning of 2009.

In today's report of the Economic Development Ministry on this issue, I would like to hear not only on the current state of events but also certain suggestions for improving work with the programmes and budget investments.

Another issue is the insufficient effectiveness of scientific research implemented within the federal target programmes, in which 58.5 billion roubles have been allocated for science. Unfortunately, we rarely see these investments bringing tangible results.

Moreover, only four programmes imply evaluation of research and development work. Given that we are assessing the regional administrations' work and have already adopted a programme for evaluating the Government's performance, we also have to reconsider the ways we are allocating state budget funds. I consider the current situation intolerable, and we cannot handle the state budget money this way. I request the Education and Science Ministry and the related government agencies to develop changes to the target programme plans to exclude financing apparently unpromising and irrelevant scientific research.

We will also have to consider a number of issues related to the state border development.

Just to remind you, the Federal Border Agency was launched in 2007, aiming to create an up-to-date and reliable system of border checkpoints and to impose order. We have done a great deal to improve the conditions on the border in its most vulnerable parts, namely in Russia's southern territories. Yet, the scope of activities to be done is still very wide, and we need to work more actively.

At today's meeting, we will adopt certain decisions concerning organisational aspects of the Agency's activities, including those of its regional branches. We expect the Agency to do quality and efficient work, with the key task of developing a border infrastructure that is convenient for citizens and beneficial to expanding the country's foreign economic ties.

Included in our meeting's agenda are also two draft laws on improving state duty collection, including the draft law on decreasing the state duty for agricultural land registration from the current 500 roubles to 100 roubles. The issue has been repeatedly posed by the Agriculture Ministry and State Duma deputies, with Viktor Zubkov working on the problem. The law will reduce expenditures for registering ownership rights for land plots for millions of Russian citizens.

Let's proceed with the agenda.

I give the floor to Deputy Prime Minister and Finance Minister Alexei Kudrin.