Working Day

9 february, 2009 13:00

Prime Minister Vladimir Putin chaired a meeting of the Government Presidium

Prime Minister Vladimir Putin chaired a meeting of the Government Presidium
"Even in a situation as tight as the current global economic crisis, social commitments must continue to be our top priority, at least in terms of what has already been included in the budget."
Vladimir Putin
Meeting of the Government Presidium

Before the meeting, Vladimir Putin congratulated Minister of Health and Social Development Tatyana Golikova on her birthday.

Transcript of the start of the meeting:

Vladimir Putin: Good afternoon, colleagues,

Let's start by exchanging the latest updates.

Mr Kudrin took part in a number of international events. For the most part, they were devoted to the discussion of issues linked with the global crisis and preparations for the summit in London to this effect. Mr Kudrin, please tell us what was discussed and what you agreed on with your colleagues.

Alexei Kudrin: Mr Putin, over the last three weeks we have held several international meetings with government experts from different countries. First of all, we conducted a financial dialogue with experts from the People's Republic of China, which our delegation visited. We discussed a whole range of current issues on the global agenda, including anti-crisis measures and steps to improve the regulation of the financial markets.

Last week we conducted a financial dialogue with the British Government. At the end of this week, the G8 finance ministers will meet in Rome, where we'll discuss the same issues again.

Russia is taking part in the work of four G20 groups - on regulating the financial markets, consolidating international cooperation to guarantee their integrity, and reforming the IMF and international development banks. A number of documents aimed at changing the regulation of the financial markets may be adopted by April 2, when government leaders will gather to discuss the results of this work. First of all, new standards to improve bank supervision - that is, Basel 2 - will be adopted.

Auditing and accounting rules will be updated to allow regulators to more clearly register risks on the balance sheets of credit institutions, and prevent them from accumulating and developing into the problems we are now facing.

Experts are working on uniform financial standards aimed at maintaining macroeconomic stability. The experience of the Maastricht Treaty is of particular importance here. Budget deficits are still very rigidly regulated in the European Union (EU) and the euro zone, and we hope this will alleviate the crisis in it.

We are working on Russia's early entry into the Financial Stability Forum. This is an international club that elaborates the main rules of financial regulation and financial architecture. We are simultaneously drafting a new financial order with our partners from the Eurasian Economic Community (or EurAsEc) and have elaborated a special plan for the group. Its members will also draft proposals for the G20 summit, and Russia will present the proposals reflecting these countries' positions.

We are also working in the BRIC format. The BRIC finance ministers have already met, and we are also planning to hold a BRIC meeting in the near future, before the summit in London. Russia is taking an active part in pooling the efforts of the developing markets to elaborate these measures.

Vladimir Putin: All right. Today, we'll discuss a number of social and other issues, but I'd like to mention some urgent questions before we start this discussion.

On Saturday, I discussed problems of social security and support for the labour market with the Minister of Health and Social Development, Tatyana Golikova. We planned to upgrade pensions three times this year: the basic pension was planned to go up by 8.7% starting March 1, the insurance part of the pension by 15.2% starting April 1, and now we'll have to increase it by 17.5%, and starting December 1, 2009 by 26.5% or, if necessary, by 30%.

If inflation is higher than expected, pensions will have to be adjusted starting August 1. All in all, we'll upgrade pensions four times.

I would like to ask the Government's economic bloc, above all the Finance Ministry, to allocate the required funds for the planned budget amendments - this is the first point. The same applies to our plans to support the labour market. This work should be continued in the regions.

Now the second point: our opportunities in the conditions of the global financial and economic crisis are not that great, and by that, I mean its global nature. However, we should by all means do what we are planning. The effectiveness of our work and the public response to it will depend on our performance.

At the end of last year and the beginning of this one, we spoke much about support for our automakers, particularly with federal funds. I am specifically referring to car purchases by our ministries and departments. We have agreed that more cars will be bought in early February. I'd like to know (addressing Mr Sechin) what has been done on this score.

Igor Sechin: Mr Putin, at the end of last year, on December 19, you held a conference at which we discussed measures to support our automakers during this year. Following the decisions made at this conference, the Government adopted a resolution on January 14 on measures to support the domestic exporters of industrial products, including automakers and transportation machine-builders. A resolution on changes in the customs tariffs has been passed and a draft Government resolution on contributing 25 billion roubles to the charter capital of Rosagrolizing (which acts as the central banker of the agricultural leasing system) has been submitted, together with a draft Government resolution on setting up a specialised leasing company.

We are still working on a number of your instructions. Implementation of some of them has been delayed - for instance, the allocation of another 12.5 billion roubles of budget appropriations for the purchase of more Russian-made cars by bodies of executive authority. You wanted this question to be resolved by the beginning of this month.

Mr Putin, we have finished working on this document with our colleagues, and will submit its final version for your signature today. In the same document, we suggest increasing this year's appropriations for subsidies to Russian credit institutions that lend money to private individuals for the purchase of Russian-made cars. This would amount to subsidising two-thirds of the Central Bank's refinancing rate, and today we will submit our proposals on this issue to you.

Vladimir Putin: If we subsidize two-thirds of the Central Bank's refinancing rate (we have agreed to do so, which is why we must do this) for citizens who take out car loans in 2009, the state will have to pay 8% of the rate they pay to commercial banks for them. It is necessary to allocate funds in the budget for this purpose - about two billion roubles.

Let's consider this question and the question of additional purchases by federal ministries and departments for their requirements as resolved at this meeting. I'd like you to draft a relevant Government resolution and submit it for my signature before the end of today.

Mr Ivanov, we have agreed to establish a Council of Chief Designers.

Sergei Ivanov: Yes, Mr Putin, we have set it up on paper and will hold its first meeting this week. I suggest that the meeting take place on the premises of the Russian Aircraft Corporation MiG. This company is in a rather difficult financial and economic position. Recently, a whole number of decisions in support of it have been made and coordinated with the Finance Ministry. The state's share in its charter capital will be increased, which means direct investment, because it is a state-owned company. The interest rate on loans will also be subsidised.

As you know, the Defence Ministry is buying a large number of fighters under the former Algerian contract.

Vladimir Putin: How many fighters is it buying?

Sergei Ivanov: 24 fighters, not counting trainers.

Vladimir Putin: How much money will be paid?

Sergei Ivanov: About 25 billion roubles. In addition to that, at the first meeting of the Council of Chief Designers, we will review the most innovation projects in the civilian sector of the economy, with the goal of continuing to fund them as much as possible, and providing scientific and technical support.

Vladimir Putin: Let's follow up on that this week.

Sergei Ivanov: Yes.

Vladimir Putin: All right. Mr Gordeyev, last week you conducted a meeting on technical regulations on milk and dairy products in Tver.

Alexei Gordeyev: Yes, Mr Putin. I conducted this meeting in the Tver Region on Mr Zubkov's instructions to verify compliance with the federal regulations on dairy products that took effect last December. The meeting was attended by representatives from all control and supervisory bodies, as well as by producers and processers primarily from dairy factories and trade organisations.

These are the first technical regulations to obtain the status of federal law in the field of food products. They have set rather clear requirements to the quality and safety (I'd like to emphasise the word "safety") of dairy products. To begin with, this law protects the rights of consumers. The law has also set clear requirements to marking the product as "milk" and "milk beverage", if this beverage was made with milk powder.

The meeting showed that all economic operators involved in the chain are adapting themselves normally to the new regulations. A working group has been set up at the federal level that includes representatives from all departments and promptly reacts to all problems linked with the issue of technical documentation, including certificates.

At the same time, the analysis of the past year has shown that, regrettably, the consumption of dairy products dropped by about five percent. Obviously, the state should develop social advertising to make these products more popular.

Vladimir Putin: You could have started by bringing some milk for us here today to taste it. Why be so greedy?!

Alexei Gordeyev: I was not ready for such a turn of events.

Vladimir Putin: You should be ready for any turn.

Alexei Gordeyev: We believe dairy products are important for the health of our citizens, and we would like to ask you to give instructions to the partially state-funded media to advertise these products more actively.

Vladimir Putin: You should simply make a proposal to finance this programme. I don't think it will cost too much. Let's do this.

Alexei Gordeyev: Thanks.

Vladimir Putin: All right, now let's get down to our agenda.

There are a number of issues on it related to strengthening guarantees of social human rights, improving state regulation of entrepreneurship, and international cooperation.

First of all, I would like to draw your attention to a bill on the ratification of the European Social Charter.

This document is meant to ensure high social standards for residents of all European countries, which essentially means building a common European social space, a goal that is absolutely in line with our own interests.

Almost all of the Social Charter clauses, such as the right to work, education, healthcare, housing, retirement pension, motherhood and childhood protection, support of individuals with special needs, are also included in the Russian Constitution and Russian laws.

However, to be honest, not all of the stipulated guarantees are materializing to the desired extent.

Yet, even in a situation as tight as the current global economic crisis, social commitments must continue to be our top priority, at least in terms of what has already been included in the budget. Moreover, we'll keep working hard on the key social problems - healthcare, the pension system, and housing.

We are also focusing on helping the unemployed, especially those who lost their jobs recently. We provide retraining opportunities and are working on creating more jobs, more opportunities to engage people in public works, as well as considering the option of people moving to other regions where hands are needed.

The ratification of the European Social Charter will certainly make a difference. It will provide additional guarantees for Russians and will encourage our domestic social standards to follow the best international practices. This is very important.

Incidentally, as we were discussing drafts of regional employment programmes, we went through all of the ideas I just mentioned, even one as difficult as resettlement to another region to find work. Allow me to cite the Yaroslavl Region, an example we discussed last Saturday: several hundred people will have to move under this programme, while several thousand will be retrained. Other kinds of support will be provided as well. All of these ideas should find their practical application very intensively.

Ladies and gentlemen,


The global economic crisis has shown very vividly what happens when state regulation is weak and emerging risks aren't duly registered and heeded, and when substantial market segments go out of fiscal control.

This is why our efforts to build modern and effective regulation tools for financial markets and business activity in general are so important. It is also important that bona fide market players are protected against all kinds of abuse.

At this meeting we'll discuss several issues directly connected with what I've just said.

First, the Finance Ministry will be authorised to accredit rating agencies - groups that assess the creditworthiness of private companies and state entities (by state entities, I mean regions and municipalities).

Such assessments are widely used in decision-making on investment or participation in business projects.

The Russian Government, like other governments, often uses ratings when selecting projects in which to place its reserve funds, such as the monies of the Reserve Fund, the National Welfare Fund, and pension funds.

Therefore, we all realize how much influence rating agencies have, and how much their mistakes or, worse, abuses, might cost us.

Essentially, the accreditation will mean state recognition of the reliability and quality of an agency's assessment and how good and precise its judgment is. This kind of certification will give investors more reliable guidelines and eliminate the absurd practice of uncontrolled and uncertified agencies assessing others.

We are certainly interested in the emergence of strong and reliable domestic rating services, ones that will fully take into account the specifics of the local market and offer quality and affordable services to both large companies and medium-sized businesses

It is also important to note that the accreditation procedure should be voluntary and as transparent and simple as possible.

Second, the Federal Financial Markets Service has drafted amendments to the Criminal Code aimed at curbing violations on the securities market.

We have long been discussing it; this kind of regulation is applied in the majority of developed economies, and I think it is time Russia introduced similar legal regulations.

Let me remind you that the basic framework bill on countering the illegal use of insider information and price manipulations was submitted to the State Duma in December 2008.

Moreover, it is not enough to declare certain actions that inflict damage on bona fide investors illegal and ban them. A substantial punishment should be introduced for such actions, and this punishment should be unavoidable. Under the December draft, the longest conviction for such actions is seven years in prison.

We also need to consider proposals to ratify intergovernmental agreements with Jordan and Qatar on encouragement and mutual protection of investment. This will create a friendlier environment for Russian businesses in those lucrative markets.

Russia, in turn, will welcome our partners' new projects in Russia. We know those countries are interested in developing cooperation. Applications from the countries I just mentioned and other regional countries have been filed to expand cooperation with us.

Let us get down to business.



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