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
Vladimir Putin's opening address:
Good afternoon, colleagues.
You probably remember that when we discussed the draft budget on September 23, we also spoke about the monetary and credit policy. And we decided to hold regular meetings to exchange information on these key issues.
I would like to say at the beginning of our meeting today that the Russian Government and the Central Bank of Russia maintained the stability of the country's banking system amid the global financial downturn and protected the national currency from dramatic fluctuations that can be so painful for people and for companies.
To attain that goal, we promptly drafted and implemented measures, which have proven effective, including actions aimed at ensuring additional liquidity in the banking sector. We have greatly simplified the procedure for lenders to access the Central Bank's resources. The securities of the country's largest strategic companies were used to expand the Lombard list of the Bank of Russia. We have consistently reduced the refinance rate, which now equals 10%, that is 3 percentage points lower than in April this year.
Commercial banks are energetically repaying Central Bank loans and replenishing their reserves due to a growth in deposits from individual and corporate clients.
Also, we have efficiently altered legislation, in particular introduced a new procedure for the provision of additional subordinated loans and approved the use of state securities for increasing banks' capitalisation.
As a result, our banking system has maintained its viability and, most importantly, the trust of the people and of companies.
However, we still lack monetary resources for the real economy, and what resources we have cost too much, even though the weighted average rate on bank loans in roubles was cut from 17.4% in January to 15.1% in August. It is still too high.
The main obstacle hindering the growth of the loan portfolio is the high risk and uncertainty in the global economy and, we must admit, also in the Russian economy. Banks prefer to keep their assets liquid rather than issue long-term loans.
Therefore, we should consider new methods to stimulate credit activity. We do see some change, but it is too slow and, in my opinion, insufficient. Our effectiveness depends directly on the macroeconomic environment, sustained monetary credit and exchange rate policies, and a restraint on inflation.
However, there have been some positive macroeconomic trends. In particular, foreign economics are improving. Russia's trade balance is quite good and its gold and foreign currency reserves are growing. They grew by $7.2 billion over the past week and reached $418.7 billion on October 9.
Inflation has slowed visibly. For a number of weeks - 2.5 months, actually - it has been hovering at zero. Investors now see less possibility for dramatic exchange fluctuations or devaluation. Moreover, the Russian national currency has been growing stronger.
In the medium term, the Bank of Russia will gradually scale back its interventions in foreign exchange - we have just discussed this change with the bank's chairman. In the long run, this should create new advantages for our economy, allowing us to lower loan and refinance rates, and provide conditions for slowing inflation.
However, currently - companies and in particular companies in the real economy have pointed this out - the strengthening of the rouble has both advantages and disadvantages for various economic sectors. I suggest that we discuss this issue today.
