Pyotr Netreba
State monopolies, state spending and established principles of economic support are all being ruthlessly axed
The Russian Government has taken its first step beyond just regulating the economy and towards systemic restrictions on state spending and direct support for industry. At the Government House yesterday, an inner cabinet meeting for the first time discussed a 15% cut in the approved tariff increases and a reduction in financing for special federal programmes by the same amount. A state commission was set up to distribute 625 billion roubles allocated as direct support between 300 strategic businesses, whose number was later to be raised to 1,500.
Officially, the meeting examined the fulfilment results of special federal programmes in 2008. But Prime Minister Vladimir Putin started a discussion on new anti-crisis measures. He expressed concern that state aid was not reaching the real sector, and demanded that support be extended "only to several hundred companies in Russia, which together produce 85% of the country's GDP". Deputy Prime Minister Alexei Kudrin went on better and suggested downscaling the planned hikes in state monopoly tariffs. "Tariffs in 2009 will be 10% to 15% less than scheduled," he said, speaking on the sidelines of the meeting. Just recently the possibility of tariff reviews was categorically rejected at the Government House. According to a schedule approved in May 2008, gas rates were to increase by 25% (35% for the public), and electricity rates by 19% (31.6% for the public). Although the Government has not yet considered railway transport rates, Russian Railways expects an average 14% increase.
Mr Putin also suggested that "an additional task force be set up, representing the Finance Ministry, Economic Development Ministry, Industry Ministry, Ministry of Agriculture and Energy Ministry". He also included the heads of strategic banks - Sberbank, VTB, Rosselkhozbank, and Gazprombank - in this group. On December 11, Mr Putin announced the establishment of an anti-crisis commission led by First Deputy Prime Minister Igor Shuvalov. Neither of these bodies has any official status yet, but Mr Putin said the Shuvalov Commission would be called a Commission on Economic Stability.
The new task force has neither a name nor a head, but Mr Kudrin said it would be subordinate to the Shuvalov Commission. Mr Putin has already issued his first instructions to the new bodies - by Wednesday, December 17, they are to draw up lists of large companies in the real sector needing support and to outline specific measures for every one of them. Mr Kudrin said that the matter concerned 300 businesses picked for federal support. This list could be enlarged to 1,500. The Government also plans to delegate some of its allocation authority to the regions. Mr Kudrin said only companies producing 15 billion to 16 billion roubles worth of output and employing a workforce of over 4,000 would qualify for the list of 300. Other criterion included a town-dependence role and an identity with the defence sector.
The new task force allotted no new budget funds for support yesterday. But Mr Kudrin said the Government House planned to redistribute 300 billion roubles in state loan guarantees through the task force (already approved by the Government on December 11), including 100 billion roubles set aside for the defence sector, and 325 billion roubles in the 2008 budget provided "to maintain the labour market and the real economy." The selected companies, in addition to state guarantees, were also promised subsidised loan rates and partial state ownership.
Mr Kudrin also mentioned the Government's plan to grant the selected businesses tax loans, for which purpose the Tax Code will be updated shortly. Another measure of support could be a redistribution of state defence order funds. But even these measures are beyond the 2009 budget limits. Yesterday, Oleg Savelyev, Deputy Minister for Economic Development, for the first time admitted officially that the Government had slashed the 1.4 trillion roubles earmarked for 2009 special federal programmes by 15% - earlier the Government denied it had cut down the programmes. Also yesterday, Government House sources reported another anti-crisis social measure - utility rates would be raised not on January 1, 2009, but at a later date.