12 march, 2009 13:30  

Prime Minister Vladimir Putin visited the Kemerovo Region and chaired a meeting of the Government's Commission for Regional Development

Vladimir Putin's introductory remarks:

Good afternoon.

Today, we are holding another meeting of the Government's Commission for Regional Development.

I would like to remind you that the Commission's previous meeting was held in Yaroslavl where we discussed the mechanisms of our joint work at this time of crisis. It was decided to establish a special regional anti-crisis headquarters. Their main tasks, namely, formulating a package of economic stabilisation measures, coordinating the actions of federal and regional state-power bodies, municipalities and the business community, were formulated.

I request, ladies and gentlemen, that you inform me today about the work in your regions.

We must also discuss the implementation of the budgets of constituent entities and municipalities in great detail.

Due to the global financial and economic crisis, Russia's regions and municipalities will, unfortunately, receive much smaller revenues this year. As you know, there will also be substantial shortfalls in revenue at the federal level. First of all, we will receive smaller regional profit-tax proceeds. Other tax proceeds, including severance-tax proceeds, will also be reduced.

It goes without saying that the Government will render additional assistance to the regions in such conditions. We have mostly adopted high-priority decisions on compensating for shortfalls in revenue.

Since January, constituent entity budgets receive all gasoline excise tax and will receive an additional 0.5% of profit tax. In all, the regions will receive an extra 100 billion roubles in revenues.

16.1 billion rouble budgetary loans, issued last year, were extended.

Let me also inform you that financial assistance to regions will increase by another 300 billion roubles in line with federal budget changes. This implies 150 billion roubles' worth of subsidies for balancing regional budgets and additional budgetary loans for a period of up to three years. I would like to remind you that such resources were, until now, allocated for a period of 12 months, and that another 150 billion roubles' worth of additional resources will be set aside.

Other measures are being implemented. For instance, we stipulate more lenient terms as regards the level of co-financing expenses for receiving federal subsidies. Notably, 95% of regional employment facilitation programmes will be financed out of the federal budget, and the rest from constituent entities' own revenues.

The Ministry of Finance is sending the so-called comfort letters enabling regions to receive bank loans in order to finance the budget deficit.

At its last meeting, the Government approved amendments to the Budget Code and expanded constituent entities' rights to allocate financial assistance to the concerned municipalities.

I would like to inform regional leaders that they must support municipal entities, in a similar manner as the Federation supports its constituent entities today.

Without doubt, we will pay attention to current changes in the tax potential of regions, while drafting the 2010 federal budget. Governor Aman Tuleyev and I have discussed this issue today. Mr Tuleyev drew my attention to the fact that we now need new approaches to defining the relevant principles for allocating such subsidies. Naturally, the relevant terms for granting subsidies to even out budgetary allocation levels must be modified.

Local authorities must also work actively to preserve and expand the taxation base. This primarily implies business incentives and the creation of the most favourable conditions for the business community's work. Investors must meet with the authorities' support and understanding, rather than indifference and, worst of all, frequent bureaucratic arbitrariness.

* * *

Esteemed colleagues,

As I have already said, 2009 will be a very difficult period. You also realise this perfectly well.

We will have to seriously modify regional and local budgets and enhance spending efficiency in order to cope with present-day problems and mitigate the crisis' consequences for our citizens to the greatest possible extent.

We must prioritise wage payments to public sector workers, fulfil other social commitments stipulated by federal legislation, finance employment and business support programmes and must also continue to implement high-priority national projects, bearing in mind that they considerably facilitate domestic demand.

Incidentally, I have just met with workforce representatives and miners. The people are concerned over such issues. Virtually all issues now mentioned by the people deal with problems, due to be discussed by us today.

We must concentrate resources on those allocations influencing the social well-being of Russian citizens to the greatest possible extent.

I want to draw your attention to the fact that only those regions that fulfil high-priority budgetary-item spending commitments will receive additional assistance.

We must also prevent the budgetary system from becoming a source of non-payments in the economy, contrary to the way it had, unfortunately, happened in the past. Consequently, we must guarantee 100% payments for fuel and energy resources and municipal-utilities services for state and municipal agencies. We must not pretend that these second-rate issues can be tackled later on. As you know, this will create a chain reaction of problems.

This does not only imply constituent entity commitments in the narrow sense of the word. Let me repeat: Regional state-power bodies must do everything in their power to maintain the solvency of municipalities.

Local public sectors employ the greatest number of workers, also organising the work of housing/municipal utilities, education and healthcare services.

As far as investment is concerned, we should focus on building nearly complete projects and thereby prevent the all-out mothballing of unfinished construction projects. All of us remember how this happened 20 years ago. And when the right time came to resume work, it turned out that the completion of specific projects cost more than building from scratch. Let's not repeat past mistakes.

We must also think of launching investment projects that would save budgetary allocations in the long-term. This primarily implies energy-saving programmes for the budget and housing/municipal utilities sectors. It would be better to put off less important programmes at this time of crisis.

Naturally, it is not easy to make such decisions. But this is the only possible responsible policy in present-day conditions. We must chart specific priorities, fulfil them, at all costs, and concentrate our resources in precisely this sphere.

This is the way we are working at the federal level. And I hope that regional and municipal state-power bodies share this viewpoint and will act in a similar way.