VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Good evening,
I am very happy to welcome you to the Russian city of Sochi. You represent the world's major companies, which have been cooperating with partners from Russia. I expect that at our meeting we will discuss your plans for expanding this business partnership further. We will also speak on the issues relevant for the government, business and community, if there are any.
The International Investment Forum, which is to open in Sochi tomorrow, will be held under the slogan "Russian Economy: The Ways to Invest", which I think reflects the current situation. Today, most businessmen do not pose a question whether to invest or not but think about the ways to invest and allocate finances.
I would like to remind you of Russia's current key economic features. In terms of its purchasing-power parity, the Russian economy ranks seventh in the world. For the past ten years, the national economy's annual growth rate has accounted for 10%, with an 8.1% p increase last year and an 8% growth in the first six months of this year.
You probably know that I set the goal of doubling the country's gross domestic product for the next 10 years in 2003. Back in the day, many experts - both Russian and foreign - considered this goal impossible. I would like to say with satisfaction that this goal will be reached by the end of 2009, by the beginning of 2010 at the latest, and this is a plain fact.
The national investments and real personal income has been growing at the rate of over 10%. I am well aware that the predictability and stability of economic policy is vitally important for business, and I would like to emphasise that despite certain political events of some urgent and even critical nature, Russia will not change its economic development model. Our policy will remain unaltered, there will be no closed market or economic mobilisation. We will not take any politically motivated decisions or actions in the economy, and we are trying to make our plans as open and clear as possible.
In a day or two, we will accept certain programme documents which will define long-term tasks and goals for Russia's economic development up to 2020. The project for the long-term development strategy has been already posted on the governmental website, and you can learn on the key directions of the Russian Government's work. To put it shortly, they concern faster innovative development of the national economy and social sector.
The documents I have named contain certain projects we are intending to implement. First of all, these are the projects of eliminating institutional restrictions for investments, developing competition and improving infrastructure, as well as increasing energy efficiency and expanding economy.
As planned, we will aim at further decreasing economic pressure, trying to arrange economic activities to reduce the tax burden. This is our strategic choice which will be heading towards.
Yet, I suppose that you are competent and serious-minded people who are perfectly aware of the events and the issues the world economy is facing at the moment. Of course, in these conditions we have to take a pause concerning the possible reduction in the value added tax. I am sure you understand what I am talking about. We have to act as cautiously and reasonably as possible, considering the social responsibilities we have to imply.
As for the single social tax, we are considering the possibility of reducing it. We will be able to do it for certain after establishing the pension scheme parameters. Still, we are intending to take further actions to improve business activity in the country. In this regard, we are planning to increase expenses-induced cost, with bonded expenses growing. We consider this as a considerable step for improving the business climate in Russia, with certain activities planned for 2009 and additional measures to be considered in 2010.
As you know, we have already adopted the decision to reduce the tax on income from mining operations and certain taxes concerning the oil and gas industry. We will consider further decreasing the taxes for the oil and gas industry and take additional measures in 2010. We will also take steps aimed at further liberalisation of the taxation system for market makers. Russia's policy concerning foreign investments will also remain unchanged.
Recently, the Russian Government has passed the law on foreign investments in the economy's strategic sector, which lists all the areas that require administrative procedures before investment is made. I should clarify that the law does not mean certain sectors will be closed for foreign investors, but implies administrative procedures which can be implemented, while other sectors will require no special coordination and permissions. In the next few months, we will launch the new procedure to see how it works and report the results. We are prepared to quickly respond to changes.
In conclusion, I would like to say a few words on the current state of events in the world's stock and financial markets, as well as Russia's trading floors. There is certain tension on our stock exchange as well, but we believe that it is the result of domestic issues. Russia's economy has no systemic problems, with all key indicators being within norm, including the surplus of both the budget and trade balance. Our gold and foreign exchange reserves are growing, as are the opportunities in the country's social sector.
I think nobody will dispute the fact that the major issues are rooted in the American and European financial markets. I am confident that the current problems can be overcome. Of course, we cannot ignore the events that are unfolding, with both Russian Government and the Central Bank of Russia taking necessary measures. As you know, Russian Financial Ministry has adopted a decision to place 1.5 trillion roubles worth of treasury funds on the market, with the extraordinary bidding scheduled for Friday and the auction for a three-month credit placement to be held on Monday. This is the first time we have adopted the decision to place funds of the Finance Ministry and the Treasury for such a long period. We will make amendments to the current legislation and provide the companies with the right to keep the deposits which they had to return by January 1, 2009 and later, which means we will gradually move towards creating so called "long-term money". The country's major banks, with assistance from the Government, will provide support to the stock market bidders by allocating up to 60 billion roubles of securities pledging. The Government will support mortgage market players and the housing construction industry by increasing the statutory fund of Russia's Housing Mortgage Lending Agency by 60 billion roubles.
The Government considers it possible to reduce the oil export duties. Up to now, when adjusting export duties we considered the results of the previous two months, but now we intend to do this taking into account the results for the past 17 days. Instead of paying the duty of $485.8 per metric ton, exporters will pay $372 per metric ton, which will leave them $5.5 billion. We estimate that $4.5 billion of this sum will be distributed to oil manufacturers and some $1 billion will go to oil processing factories. We expect that the money will go for supporting the current dynamic work of energy industry companies, which will provide conditions for smooth crediting.
Certain financial institutions in Russia are in need of the Government's support, with the Central Bank of Russia considering various options and measures to provide it. Recently, it has been announced that the Russian Government will back up the stock market by allocating up to 500 billion roubles for purchasing shares of Russia's leading companies. With the economic turbulence on the world financial market and the underestimated cost of Russia's biggest companies, this measure is seen as economically reasonable. During the first stage, we consider allocating 250 billion roubles for the purpose. As for the remaining 250 billion roubles, we will observe the situation on the world and domestic markets and adjust our financial plans, if needed. But I would like you to point out the following: as I have said, the country's budget will include corresponding finances, which means that the Finance Ministry does not think it is possible and necessary to utilise the reserve funds, including the national welfare fund, for this purpose. This is also linked to the goal of sustaining the national macro-economic indicators.
I would like to emphasise that we will act reasonably and cautiously. I do not think it would be reasonable to spend the revenues from oil and gas, yet, but we can do it if it becomes necessary.
The Central Bank of Russia is implementing a number of important measures as well. As earlier, the Bank will continue placing short-term credits. A crucial step, namely, reducing the obligatory commitments, was announced yesterday. We consider this measure as important and expect it to bring a positive effect, since banks will receive the right to put some 300 billion roubles into circulation, the money being the Central Bank's personal assets to be equally placed among banks.
We are perfectly aware of what is occurring on the world market, and we will monitor the situation carefully to provide a timely response.
For this year's first six months, Russia received foreign investments worth $46.5 billion, including $11 billion in direct investments. Due to the liquidity crisis in the US and European financial systems, part of these finances are in demand by the western markets, and we are well aware of this. Yet, the Central Bank of Russia estimates that the Russian market still will have higher revenues than expenses by the end of 2008.
Just to remind you, the Central Bank's gold and foreign exchange reserves amount to over $550 billion ranking third in the world after China and Japan.
Now, a few words on the current situation on the oil market: Russia's position on the market is special, both due to the country being the biggest energy supplier on the world market and its biggest energy consumer.
For Russia the most reasonable way to address the situation is to keep theprices at a level where they would cover manufacturers' expenses and investment needs, but at the same time would not have a negative effect on the world and national economies. In this regard, we find the current price of oil comfortable, given that we planned the budget considering even lower oil prices on the world market.
We are prepared to efficiently collaborate with all partners in this sector. Thank you for your attention.
