Pyotr Netreba, Dmitry Butrin and Natalya Grib
Plans for 2009-2012 will depend on November statistics.
This week, Prime Minister Vladimir Putin is beginning a series of Government meetings to define Russia's fiscal policy for 2009 and 2010-2012: on December 5, anti-crisis budget measures will be considered, while on December 9, the first attempt will be made to put together a three-year budget for 2010 and the following two years. Government moves will depend on economic figures reported for November. Non-core indicators, such as railway haulage and domestic gas consumption (both of which dropped by 20%), show that the Government will have to work on the basis that industry has taken a nosedive at the end of 2008.
According to Kommersant's sources, Mr Putin intends to finalise his short-term economic policy this week in two key sectors. Several sources simultaneously told Kommersant that on December 5, the Prime Minister will announce a new package of anti-crisis measures and on December 9, will chair a meeting of the Budget Estimates Committee to announce the start of work on a new three-year budget for 2010-2012 and describe rules for putting together a budget given the new economic conditions.
In anticipation of these events, the Government House is in turmoil: the Prime Minister's schedule depends on the energy of his supporting staff and above all on whether or not Economy Minister Elvira Nabiullina is able to prepare a forecast for social and economic development for 2009-2011, and to update the forecast for 2008, by December 1. As of November 28, the White House had not yet received any forecasts.
So far, the Government is only trying to estimate the extent to which the Economy Ministry will trim the 2009 forecast. On November 27, Prime Minister and Finance Minister Alexei Kudrin hinted that initial GDP growth plans would be cut in proportion to the falling rates of world economic growth, or more than twofold.
Kommersant sources say that the Economy Ministry is now choosing between negative and less pessimistic scenarios: either to announce a real, but panic rate of economic growth of 0% to 3%, or to set a difficult-to-reach plank of 5%, thus signaling to the market that the Government is able to cope with the difficulties. The Government is not ruling out that on December 1, Ms Nabiullina will ask for the forecast-submission date to be postponed. In that case, Mr Putin will have to shift the start of a budget campaign indefinitely.
The future of Mr Putin's new package of anti-crisis measures is more certain. All proposals are being put together by First Deputy Prime Minister Igor Shuvalov. On November 28, Mr Shuvalov set a sort of record by holding four anti-crisis meetings at the same time: on transport infrastructure, on the agro-industrial complex, and on the relationship between financial and building organisations on the market. All deputy prime ministers of the White House took part in these meetings. On the same day, Mr Shuvalov held closed consultations with members of the Russian Union of Industrialists and Entrepreneurs (RSPP), where he mentioned at least three economic development options. The White House declined to disclose their details for fear of giving advance publicity to Mr Putin's statement on December 5.
President of Russian Railways (RZD) Vladimir Yakunin, following the consultations between the RSPP and Mr Shuvalov, said he was confident that the Government would not agree to cut the tariffs of natural monopolies. However, according to him, the Government could introduce, through the Federal Tariff Service, "an emergency tariff in special cases to guarantee the construction of priority facilities". The meeting also discussed the future of investment projects financed by the Government from the Investment Fund.
Following the November 28 Government meeting, Deputy Prime Minister and Finance Minister Kudrin announced that the Government could refuse to launch new Investment Fund projects, while the Economic Ministry confirms that everything might not end there. "Most likely, even current Investment Fund projects will not be fully financed," an Economic Ministry source told Kommersant.
Much of the short-term strategy plan will be determined by November statistics, but the White House is still not clear about how industrial production will fall in November 2008 - either a big nosedive or smoothly. It was only in the final days of November that early data appeared, indicating the first scenario: RZD (see the Monitoring heading on the same page) and sources close to Gazprom officially reported a 20% drop in demand for gas and railway carriage. A source close to Gazprom explained to Kommersant that almost none of the consumers have taken out their full quotas of gas ordered either from the monopoly or independent producers, such as Itera or Novatek. The first to do so were power plants, owing to the unusually warm weather that is predicted to last until December 20. Gazprom and Itera declined to comment. Leonid Mikhelson, Novatek board chairman, told Kommersant that "in view of the lower natural gas consumption due to warm weather, company management expects only 8.5% production growth in 2008 instead of the earlier planned 10%".
The "nosedive" scenario has its advantages. For example, it offers hope that state injections in the market will support the economy in the period of restorative growth in the spring-summer of 2009. Should the "slower" option prevail, state support, including from the budget, will be used only to keep the situation from getting worse, which is a far riskier prospect. However, a scenario involving the "nosedive" is less acceptable to the Government politically. So far, most of the analysts close to the Government believe that November 2008, as well as December, will show zero production growth, and thus opt for a "gradual downturn".
