Pierre Sidibe
Vladimir Putin promised not to abandon social programmes
Prime Minister Vladimir Putin is concerned about the growth of unemployment and does not see prospects for the better development of the situation.
Speaking at a EurAsEC meeting on Friday, Mr Putin placed unemployment third on the list of national economic threats, behind the instability of the banking sector and reduction of industrial production.
He said that Russia, like other countries, is also experiencing the negative effects of the financial crisis, "but we are sure that our national economy is stable enough to survive this crisis with minimum losses. I would like to stress that we are not planning to abandon social programmes," Mr Putin said.
The "psychotherapeutic" effect of Mr Putin's announcements was properly supported by macroeconomic figures. According to the Prime Minister, Russia will see a 6% GDP growth by the end of this year, and people's real incomes will have grown by around 7%. Eleven-month inflation is expected to hit 13.5%. "On the other hand, food prices aren't growing as fast as before, and prices of refined oil products are dropping, although not as fast as we had hoped," Mr Putin said.
At the same time, prices of oil, metals, and other commodities aren't growing as quickly as before. "This may still lead us to a negative foreign trade balance. This is a factor of pressure on the national currency," Mr Putin warned. Nevertheless, there would be no sharp fluctuations in the rouble, or at least, the Government is determined to do its best to prevent them.
In short, the country will survive the crisis in any case; the question is when and what losses it will suffer. Only once, during the latest Q&A session, Mr Putin noted that he was waiting for an economic upswing in spring 2010.
On Friday, he did not look too far into future, but set several priorities. The first were Russia's banks. "We can say with confidence that we have prevented a banking systemic crisis that threatened Russia. We allocated about 4 trillion roubles to support the banking system. The total amount of money earmarked for this purpose by the Government and the Bank of Russia is 9 trillion roubles. We have also managed to preserve confidence among bank depositors, which I think is extremely important," Mr Putin said.
Second place was given to the support of the manufacturing industries.
The Prime Minister said that industrial production would show some overall growth by the end of this year, but a number of sectors were currently forced to slash production to reduce costs. The metals and chemical industries, building materials production and engineering were hit the hardest because they depend heavily either on exports or on investor demand. Although oil production reduced by 0.5% from January to October, "Russia's status as a reliable supplier of hydrocarbons is not discredited," he said.
The Prime Minister then addressed unemployment growth, saying that he does not see any changes for the better. In October, unemployment in Russia reached 4.6 million, which is 300,000, or an 8% increase from last year.
"That is an alarming sign. So far, we do not see any changes for the better, but we are developing a package of measures to prevent the situation from getting worse and even to improve it," Mr Putin said.
The future collapse in the labour market forced the Russian Government to reduce the quota for foreign labour immigration by half. "Let me stress that this move is prompted by labour issues inside the Russian Federation. I hope you will understand the rationale behind the decision. At the end of the day, we are all interested in a civilised labour migration policy," Mr Putin asserted at the meeting, clearly making excuses. This was probably the first thing that concerned the members of the international organisation directly.
The audience listened to Mr Putin's speech very attentively, particularly the segment about the possible decision of the Russian Government to offer a $2 billion loan to Kyrgyzstan. "$300 million may go to support the budget and $1.7 billion to finance major infrastructure projects, including those in the energy field. I believe this work may be completed before this year is out," the Prime Minister said. Earlier, he agreed to give a $2 billion loan to Belarus.
After the meeting, the Prime Ministers signed agreements to encourage and mutually protect investment in the EurAsEC member countries, an agreement on fundamental principles for the EurAsEC member-countries' currency policy to regulate and control the flow of funds, and adopted a concept on forming a common EurAsEC energy market.
At the end of the meeting, Mr Putin made an unexpected proposal: he proposed that member-countries build one hotel each in the area around the Olympic Park in Sochi and name them after their capital cities. "We are talking about a major humanitarian project that would boost the prestige of our states," Mr Putin ensured the audience.
Meanwhile
At today's meeting, the Government Presidium will discuss the realisation of federal target programmes and the federal address investment programme for the period of January-September 2008, and is expected to establish a council on the development of Russian cinematography. The council will be in charge of increasing state support for producing, releasing and screening Russian films, will help to promote and develop Russian films abroad, and develop protection measures to defend the Russian film market. Prime Minister Vladimir Putin will head the council.
Moscow issue