27 january, 2009 14:00  

Prime Minister Vladimir Putin held a meeting of the Government Presidium


"Rosagroleasing capital is also increasing by 25 billion roubles, as agreed before. A greater part of the sum will go toward purchasing farm machines and vehicles, as we have intended, thus increasing sales of Russian-manufactured machinery."

Vladimir Putin Meeting of the Government Presidium

Vladimir Putin: Good afternoon,

Let's start with the exchange of the latest information. Mr Kudrin, could you please tell us about the implementation of the 2008 budget?

Alexei Kudrin: Mr Putin, we have preliminary information on the implementation of the 2008 budget. The final results will be ready by April after all ministries deliver their reports.

Tentatively, the profits for the past year amounted to 9.258 billion roubles. This is 103.3% of the plan that we specified in the latter part of the year but we have exceeded it as well. Our expenses were 7.560 billion roubles, or 97.7%. The budget surplus of 1,849 billion roubles (4% of GDP) was mostly transferred into the Reserve Fund and the National Welfare Fund.

I'd like to mention the ministries that utilised the budget by more than 99% or 99.5%. This is the Interior Ministry and a number of other security agencies. The figure for the Defence Ministry is more than 99%. Other ministries were less successful, and I won't mention them.

Vladimir Putin: You will tell me about them separately later on.

Alexei Kudrin: Last year, the total under-utilisation of budgetary appropriations was about 46 billion roubles. This is excluding the investment fund that may be transferrable under our plan. Ministries and departments failed to use these funds on individual undertakings. Mostly, this is linked to delays in the conduct of tenders, adoption of normative acts on these expenses, acceptance of the work done, or refusal to accept it because of poor quality.

For this reason, the failure to use these funds is not always someone's direct fault. More often than not, ministries were stricter in accepting the work - they refused to pay and saved the money for the state. There are such examples.

Ministries and departments saved much money on tenders on construction and contractual work. All in all, the savings exceeded 100 billion roubles. Ministries and departments spent part of this money on other work, or to expand construction within the limits of their prerogatives. But allow me to repeat that in some cases the planned work was not fulfilled. We'll present a detailed report on this subject.

Vladimir Putin: All right. How much money do the National Welfare Fund and the Reserve Fund have today?

Alexei Kudrin: Mr Putin, on January 1, the Reserve Fund had 4,026 billion roubles. Considering the change in the currency rate, it has 4,700 billion roubles now. The fund had currency leftovers in the Central Bank, and this is why it has more roubles now.

The National Welfare Fund has more than 2.6 trillion roubles now. Thus, all in all we have 4.7 billion and 2.6 trillion roubles.

Vladimir Putin: In dollar equivalents, this amounts to $210-$215 billion.

Alexei Kudrin: Yes, about $210 billion.

Vladimir Putin: Thank you. Mr Basargin, you conducted a number of meetings on housing policy in two districts. Could you please tell us about this?

Viktor Basargin: Mr Putin, indeed, we held two onsite meetings in the Volga and Urals districts, in Samara and Chelyabinsk, respectively.

We discussed incentives for housing construction in line with your directives, and initial steps towards organising self-regulating structures in the building industry.

More than 300 construction companies and 19 regions took part in the meetings.

First, everyone supports the Government's current measures to invigorate housing construction. Second, today all 19 regions have confirmed that they will keep construction on the same scale as in 2008.

Moreover, they are taking additional measures to boost housing construction. Practically half of the regions will transfer money to the charter capital of their mortgage institutions. These additional sums range between 200 million and 500 million roubles.

Today, the regions are actively providing incentives to the construction of low-rise houses. Moreover, two regions out of 19 are launching the industrial methods of low-rise housing construction, although the cost of a square metre even in this case is 28,000-30,000 roubles. These are the latest technologies.

In addition to this, the regions are adopting programmes to support young families. In other words, they are actively working in this direction, trying not to downgrade support for the infrastructure development on all construction sites.

All three of our development institutes - the Housing Construction Fund, the Communal Services Reform Fund, and the Mortgage Agency - took part in these meetings. Following the results of the meetings, we decided to meet again here in Moscow on February 5 and invite representatives of all institutions of the Mortgage Agency to attend the meeting. We think that action should be taken on the interest rates because many people cannot afford to pay 15-18%. Thus, we decided to work in this direction, and to meet on February 5 in Moscow.

Now I'd like to say a few words about the Communal Services Reform Fund. We have received proposals from all regions. We have calculated that if we spend 110 billion roubles from the fund, we will create 1.5 million new jobs. This is one of our anti-crisis proposals.

In terms of the Housing Construction Fund, we have signed three agreements - with the Khanty-Mansiisk, Sverdlovsk, and Chelyabinsk regions. Every agreement covers several plots of land. A number of agreements are already being implemented as new plots of land are put to use. Therefore, we believe that the practice of holding such meetings is quite effective, and we are going to continue this work.

Vladimir Putin: Are production capacities sufficient to use these funds if we assign them earlier, say, in 2010-2011?

Viktor Basargin: We have established that we can use them, though these are just the funds of the Russian Federation. In addition to them, we will use another 60 billion roubles from the regional budgets.

Vladimir Putin: Are regions capable of funding this work in 2009?

Viktor Basargin: Yes, they can fund it. Regional officials understand that formation of new jobs is one of anti-crisis measures.

Vladimir Putin: All right, let's return to this once again. Mr Trutnev, could you please tell us about the recovery of the mineral raw material base?

Yury Trutnev: Mr Putin, the results are preliminary for the time being. We will sum up final results by the end of February. However, I can say today that we have preserved the general trend of the last four years. In other words, we have discovered more deposits of major types of mineral resources than have been extracted in a year. This primarily applies to oil, gas, gold, coal, and silver and platinum group metals.

Speaking about the scale of recovery, in oil and natural gas it is tentatively 103%; we have found 1.5 times more deposits of coal and silver and platinum group metals than produced; in gold and nickel the difference is 2.5 times.

We have discovered a whole number of deposits, including 66 hydrocarbon deposits. One of the latter is of strategic importance, and is located in the Caspian Sea; some of them are medium-size, such as the Kamskoye, Khudoyelskoye, Zapadno-Rakushechnoye, and Shushukskoye deposits. We have also found large deposits of gas, manganese, coal, uranium, platinum group metals, copper and raw materials used in construction.

During the past year, we set a record in granting licenses for the use of mineral resources, and transferred more than $90 billion to the budget, the biggest figure in the last few years, and 48 times larger than the 2003 figure.

We are hoping to preserve all trends in the recovery of major minerals this year.

Vladimir Putin: So, there are no reasons to fear that we are consuming more than we are discovering?

Yury Trutnev: No.

You remember that in 2004 we endorsed a new programme for the recovery of the mineral raw material base. Since then the negative trend has been reversed. Before that, for 15 years we discovered less than produced, and our mineral raw material base was continuously diminishing, but now it has been growing for four years. This year, you supported an expansion of the recovery programme. I'm confident that this will allow us to expand into new frontiers.

Vladimir Putin: Good. Mr Shmatko, we have talked several times about energy efficiency, our recurring theme. Please tell me, what's been going on?

Sergei Shmatko: Mr Putin, in compliance with the Federal Law On Energy, Government Executive Order No. 1r for 2009 confirms guidelines of state policies for enhancing energy efficiency via renewable energy sources through 2020.

This is Russia's first legal act determining all-around support of government use of renewable energy.

The document sets goals and potential growth rates of electricity generation on the basis of renewable energy sources.

They will account for 1.5% of total electricity generation in 2010, 2.5% in 2015, and 4.5% by 2020, compared with less than 1% in 2008.

Many developed countries crossed the 10% mark long ago. The figure is 20.7% for Australia, 16.4% Canada, and 22.6% Finland.

It is an essential matter for Russia.

Geothermal, tidal, wind, and small hydropower plants are preferable mainly in remote and hard-to-reach areas.

Russia leads the world in certain high technologies. Tests are underway at the Kislaya Guba experimental tidal power station in the Murmansk Region, whose cutting-edge floating power unit, with 1.5 megawatt orthogonal turbine capacity, has no equal in the world. There is global interest in such technologies.

I think it will create considerable export potential if the project is tested and finished successfully.

Vladimir Putin: All right. It stays among priority projects, and we will proceed from that.

Sergei Shmatko: Yes, it is one of our electric industrial priorities. The project is also essential from the point of view of our international pledges to cut greenhouse gas emissions.

Vladimir Putin: That's important, but Russia's energy future is even more important, so please pay special attention to it.

Ms Nabiullina, you have chaired a meeting of the Council for Foreign Economic Activity, and a meeting with our Belarusian colleagues will be held quite soon. How is the job going on? What has the council achieved and what are the blueprints for the Russian-Belarusian meeting?

Elvira Nabiullina: The Council for Foreign Economic Activity gathered on January 23. It is affiliated with the Economic Development Ministry and brings together leaders of the entrepreneurial guild, the Russian Union of Industrialists and Entrepreneurs, the Chamber of Commerce and Industry, the OPORA small and medium-sized business organisation, Business Russia, and leading industrial companies. We discussed the results of Government foreign economic activities for the preceding months-in particular, customs tariff regulation. We made many decisions to change customs duties following corporate initiatives to protect our markets during the crisis.

We have made 28 resolutions on changing customs duties since the end of November, and are drafting another six, compared with 40 throughout 2007-which means we have been rather active in changing customs duties. The changes concern combine harvesters, automobiles, a large number of metal items, food, air transport, and oil and oil product export duties.

Our industry has also received support from rapidly changing currency rates. Entrepreneurs have appreciated it. Our efforts are beneficial to export-oriented companies.

We also discussed measures being drafted. They include proposals by ministries and agencies to change customs duties for 300 commodities. Entrepreneurs also ask to step up export promotion. The Trade and Industry Ministry has a programme to support industrial exports. We have increased relevant allocations for this year. The programme is very popular. Companies say even increased grants will last only four to six months, so we will see whether or not we can afford any further increase. It mainly concerns manufactured goods, so we are helping companies that are finding ever new export niches even when sales are shrinking worldwide.

We have joined hands with business for a unified foreign economic information network that will offer comprehensive information to Russian and foreign companies.

We also discussed opportunities for public-private partnership and the establishment of new high-tech clusters. Some of them might purchase missing assets abroad. This business has many problems, and we have agreed to analyse relevant initiatives urgently.

As for Belarus, we are following your instructions. A joint meeting of the Russian Economic Development Ministry and the Belarusian Economy Ministry will gather in Minsk tomorrow.

Two problems will dominate its agenda. The first concerns scenarios for Russian and Belarusian economic development in 2009 and through 2011 with consideration for the two countries' economic interdependence. Russia accounts for almost a half (47.5%, to be precise) of Belarusian trade, while Belarusian commodities make up a mere 5% of the Russian turnover. The Belarusian economy closely depends on Russia in other respects, too. Many Russian industries are linked with Belarus by partnership and process flows.

We will also discuss a draft joint action plan to minimise the aftermath of the financial crisis, improve the balance of payments, and streamline the terms of enterprise and bilateral trade.

We intend to approve the draft and prepare it for a meeting of the Union State Council of Ministers, which will gather within a few days. The plan includes long- and short-term measures for finance and industry. We hope to discuss and approve it with our colleagues tomorrow.

Vladimir Putin: All right. You have mentioned the beneficial impact of the changing rouble rate on export-oriented companies.

I visited one such company yesterday. It was Acron, a mineral fertiliser manufacturer. They really mentioned it as an essential factor for retaining current output volumes. This is a large industry. Acron alone employs 5,000, plus another 5,000 in another Russian region. Rouble rate changes are really essential to the industry, as they are for agriculture.

In connection with this, they and representatives from several other industries say it is necessary to reduce export duties. I said the matter demanded urgent analyses. Have you done it, Mr Sechin?

Igor Sechin: Yes, we have considered the issue on your order, Mr Putin. The relevant document is in the Government Office now, and I hope we will report about it even today.

All told, Russia produced slightly more than 3 million tonnes of mineral fertilisers in January and February 2008. The domestic price of nitrogen fertilisers was approximately 6,500 roubles in physical terms, carbamide - 8,500 roubles, phosphorus-containing fertilisers - 12,000, and compound fertilisers - about 9,000. As for world prices, they were $300 for ammonium nitrate and carbamide, $720 for ammophos, and $540 for compounds.

Vladimir Putin: I see. Have you worked on exemptions from customs duties?

Igor Sechin: Yes.

Vladimir Putin: What now? Is everyone in agreement? Do you have any comments to make, Ms Nabiullina? Does the Economic Development Ministry have anything to say?

Elvira Nabiullina: No objections. We approve the reduction and even abolition of nitrogen and compound fertiliser customs duties.

Vladimir Putin: What about the Agriculture Ministry?

Alexei Gordeyev: No objections. We have approved the project.

Vladimir Putin: So you don't think it will hit our farmers?

Alexei Gordeyev: No. After all, raw materials customs duties persist in order to promote Russian manufacturing industries and receive added value. Thus, we think it is a balanced decision, and we approve it.

Vladimir Putin: Good. Has the Finance Ministry coordinated it?

Alexei Kudrin: It has not yet, but we are willing to consider it.

Vladimir Putin: How soon?

Alexei Kudrin: Today.

Vladimir Putin: Fine. Let us discuss and approve it today. Agreed? Thank you. Now, I want to ask Ms Golikova how maternity capitals are used to pay mortgages.

Tatyana Golikova: Mr Putin, colleagues,

We made two amendments to the laws on federal subsidies for citizens with children and on the federal budget at the end of 2008.

One amendment authorised the use of maternity capital to pay mortgage loans made before December 31, 2010, and earlier.

An accompanying cost estimation that is among the amendments to the federal budget law projects that approximately 88,000 families qualify for this right, and the arrangement will cost approximately 26.3 billion roubles from the federal budget.

Government decisions authorising the procedure followed the issuance of those bills immediately. In the opening working weeks of 2009, Pension Fund offices accepted 1,134 applications totalling 307.1 million roubles. Indicatively, 49,993 individuals applied to Pension Fund offices in either oral or other "in presentio" forms for explanations on how to use maternity capital for such purposes.

Pension Fund offices make such explanations as information or in office announcements and enumerate necessary papers.

We expect the trend to grow because initial weeks are spent on explanations and banks need ten days or so to issue relevant papers on loan contract verification, etc. Thus, we expect the work to gain momentum in the months to follow.

According to regulations, the Pension Fund considers all papers within a month after receiving an application, and money for mortgage and interest payments is transferred within two months.

Vladimir Putin: Mass media should keep the public informed about the rights of using maternity capital for people to see how it all works, how long it takes and what they should do.

Let us now move to today's agenda.

We will consider practical issues connected with anti-crisis measures.

Support for agriculture and small business should come first. We will confirm earlier resolutions today.

I am referring to 45 billion roubles allotted to Rosselkhozbank to finish the construction of stock breeding complexes on the priority project for agro-industrial development. According to Agriculture Ministry estimations, there are 360 complexes to finish-all large or medium-scale. Their work will impact the entire agricultural sector and improve food supplies. The allocation also allows continued purchasing interventions to stabilise grain prices.

Rosagroleasing capital is also increasing by 25 billion roubles, as agreed before. A greater part of the sum will go towards purchasing farm machines and vehicles, as we have intended, thus increasing sales of Russian-manufactured machinery. The money will also go towards purchasing pedigree stock and industrial equipment.

Electrical access problems and high charges are among the worst predicaments of small and medium-sized enterprise.

We intend to make 550 roubles the ceiling charge for plugging in small (up to 15 kilowatts) projects. As for 15-100 kilowatt projects, they will be entitled to three year-instalment payments.

I order the Federal Antimonopoly Service and other inspecting agencies to closely monitor compliance with decisions made today, and put and end to any attempts by grid proprietors to abuse their monopoly status.

We will discuss another bill today-on amending the procedure for criminal prosecution for violations of antimonopoly legislation. In Russia, this legislation is far more liberal than in many economically developed countries of the world.

The new law envisages punishment for the use of banned methods that effectively boil down to robbing consumers. Such punishment must be unavoidable.

I want to highlight another item on today's agenda. It is a bill on streamlining the taxation of householders' societies, housing construction cooperatives and other housing management companies. The bill envisages exemption from value added taxation of housing and public utilities provided by managerial companies in multi-family dwellings. The bill will fill in a major gap in the fiscal legislation, which is presently an obstacle to the emergence of latter-day housing managerial agencies.

The Supreme Commercial Court has made relevant decisions, and it is our duty to make everything conform.

I also want to add that the bill guarantees the public the right of choice-either to deal with housing and public utilities companies for themselves or entrust the mission to managerial companies that will monitor the quality of services and the soundness of fees. It is up to dwellers to choose the arrangement of housing and utilities they consider the most convenient.

Let us move on to our agenda now.