Prime Minister Vladimir Putin met with Sergei Vakhrukov, Governor of Yaroslavl Region
Transcript of the beginning of the meeting.
Vladimir Putin: Good afternoon. What is the current outlook in your region?
Sergei Vakhrukov: On the whole, the situation is more or less normal. It is complicated, but stable and it is under control.
We are implementing an anti-crisis programme, which is fully synchronised with the federal programme. We are tackling the key issues aimed at preserving stability.
We are meeting all of our obligations under the budget and in the social sphere. We have taken extra measures to support low-income groups and the unemployed.
The main problem we are dealing with today is of course unemployment. This is the most acute problem for us. The situation in the labour market has stabilised. There has been no growth in unemployment in the last three months, but the number of people out of work is still rather high.
Vladimir Putin: 25,500...
Sergei Vakhrukov: Yes. We are implementing the programme, which we were the first to adopt in January of last year and get approved at the federal level. We have received 140 million roubles from the federal budget and we have added our own funds.
Vladimir Putin: Does the programme work?
Sergei Vakhrukov: Yes, the programme works. Potentially, it will cover 32,000 people during the course of the year. Already more than 15,000 are involved in the programme. We have pro-actively trained 1,240 people, and all of them have found employment. Another 700 people are in training and on an annual basis we will increase the funding and the number of trainees because it is required at this time.
The only problem is that we would like to prolong the period of training somewhat. The present period is not enough and we are unable to provide sufficient training in some jobs in the allotted time period (six months).
Vladimir Putin: We have already passed a resolution to prolong the training period.
Sergei Vakhrukov: Yes, we are going to look at the problem again with the Ministry of Healthcare and Social Development because we are very concerned about the GAZ Group situation and additional measures are necessary. We are coordinating our efforts with my counterpart in Nizhny Novgorod Region, Valery Shantsev. I think more could be done in this regard.
Vladimir Putin: When you say "GAZ Group" you mean Avtodiesel?
Sergey Vakhrukov: Yes, I mean Avtodiesel, but I have three more enterprises.
Vladimir Putin: As for Avtodiesel, 5.6 billion roubles have been authorized for that company. The money will be available shortly.
Sergei Vakhrukov: I appreciate your support very much. The restructuring process was started recently, and state guarantees in the amount of 19.7 billion roubles are to be approved soon. A decision to that effect has been taken.
I would like to thank you for the Saturn science and production association. Your personal intervention has practically saved that business. Today I can report that all the instructions you gave have been fulfilled. The enterprise is operating smoothly and output has increased by 28% this year compared with last year for the whole group.
Marketable output of the parent company has grown by 49%. The outlook is good. The SaM146 engine is currently used on Superjet-100. The plane made a very good showing at Le Bourget air show. Over 150 aircraft have been ordered, contracts have been signed.
The main goal is to ensure uninterrupted production of the engines. I visited the plant two weeks ago and looked at the preparations. I was there with Denis Manturov, Chairman of the Saturn Board of Directors. They are doing some good work to launch the production run of this engine.
And there are also other orders. Today we enjoy strong support from the Armed Forces. In Komsomolsk-on-Amur you made a decision to provide 60 planes for the Russian Armed Forces. The engines come from Saturn. Saturn has a full order book for several years to come.
Vladimir Putin: How are relations between the real sector and the financial institutions shaping up? I am going to meet with the heads of the national financial institutions in an hour and a half.
Sergei Vakhrukov: Loans are rather expensive today. The real sector can hardly afford to take out a loan. Saturn is a case in point. In September of last year the credit portfolio came to a little over 11%, the current rate is over 17%. Today they will have to pay 1.250 billion a year in interest. That is comparable to the wage fund.
Vladimir Putin: What was the rate at the beginning of the year?
Sergei Vakhrukov: Early in the year it was 12.5%, but now accounts payable have increased.
Vladimir Putin: Both their accounts payable and accounts receivable have grown.
Sergei Vakhrukov: Yes, they have accounts receivable. You have signed an executive order to increase the authorised capital by 5.2 billion roubles. This will be accomplished in the near future through an additional stock issue. We would like it to happen as soon as possible. We hope it will be in September. That would make things much easier for them in this respect.
And we would like to see the approved plan for subsidising interest rates for the defence industry become effective. They have already received 104 million in subsidies and another 100 million are on the way. Actually, their quota is 1.4 billion.
The formal procedure is very complicated. Unfortunately, not every enterprise can avail itself of this resource, at least among our enterprises.
Vladimir Putin: We will see what can be done to cut down on the red tape. Still, do you notice any reduction in interest rates since the start of the year?
Sergei Vakhrukov: Frankly, not very much.
Vladimir Putin: This in spite of the cut in the Central Bank refinancing rate?
Sergei Vakhrukov: Yes, for the majority it is very difficult today. I recently negotiated with Sberbank and VTB. We have taken out a fairly large amount of credit. For example, almost 20 billion in VTB money is at work in the region. But interest is very high even for our budget loans. We have to take out loans, and that means 17% per annum, a very high rate.
Vladimir Putin: Is it 17.5% for industrial enterprises?
Sergei Vakhrukov: Industrial enterprises get loans at 17% at best, but the rates are even higher for most companies, more than 20%.
Vladimir Putin: To this day?
Sergei Vakhrukov: Yes, to this day. The economy cannot stand it, especially since the matter concerns mainly refinancing and not new loans. This vicious circle creates serious problems for the real sector. The higher cost of loans influences production, which leads to falling demand and more problems in the future.
Vladimir Putin: And what is the situation in agriculture?
Sergei Vakhrukov: Agriculture is in approximately the same position as last year. Unfortunately there has been a small decline. All this is primarily linked to the cost of dairy products. Procurement prices have fallen dramatically and 90% of agricultural production in our region is connected with it. The decline amounted to nearly 40%.
The reasons for this decline in purchasing pricing are unclear, because currently retail prices have risen, but still procurement prices have fallen. Consequently: if today milk purchases for 10-10.30 roubles, then on the retail market it is priced at over 27 roubles. The difference between the two is overwhelming. It is almost equal to, if not greater than, the prime cost. Companies involved in agriculture do not feel like they are on stable footing. That said, this year we increased the support given to rural areas. And I hope that by the end of the year we will have stabilised the situation. Stabilising procurement prices is something we consider very important.
I understand that the market plays an important role here. But we are currently planning to implement major investment projects for rural areas. We have reached an agreement with investors on one of them - the construction of a new agro-industrial complex with a capacity of over 4,500 heads of cattle. It will be built in two phases, in one area. The investment exceeds 6 billion roubles. But, if the current pricing structure doesn't change, then this will be very difficult to realise.
Also, currently, it is rather difficult to finance villages, because they cannot offer much in terms of collateral, and then there is the devaluation of that collateral.
It is very difficult for promising investment projects to get loans.
We subsidise the interest rates on loans quite extensively, and the Federation does help us in that regard.
Vladimir Putin: We do not subsidise any sector other than agriculture to that extent.
Sergei Vakhrukov: Yes, support here is very tangible. But financing needs to be worked out, loans need to be repaid. And if the purchasing price of milk falls, we will not be in able to repay the loans.
Vladimir Putin: We should review these trends after the relevant decisions have been made about foreign markets.
Sergei Vakhrukov: Yes. Now we are seeing the procurement price situation begin to improve somewhat. It would not be bad, and we have discussed this, if an intervention fund for powdered milk was set up, the same as we have for grain. It would be reasonable to purchase milk and produce powdered milk, just as the Belarussians do, for example. This would offer very good support; it would help our rural population a great deal now, in addition to the already high level of government support which currently exists.
Vladimir Putin: Good, we will consider it. As for local wage arrears, they are not increasing, although they remain.
Sergei Vakhrukov: Yes, wage arrears are still quite large. We are working very closely with the prosecutor's office and business owners. Some of these arrears are old debts from companies that are now bankrupt. And it is one of those cases, concerning Kholodmash, which we resolved just recently. We paid over 15 million roubles in wage arrears. The enterprise will soon start operating at full capacity. Next year we will create over 1000 new jobs there.
Vladimir Putin: Good.
