Prime Minister Vladimir Putin held a meeting of the Government Commission on Regional Development
Vladimir Putin's opening remarks:
Good afternoon,
Today we are having another regular meeting of the Regional Development Commission. We should aim for a very substantive, concrete and, hopefully, professional conversation because the subject is the budget for next year, our priorities, opportunities and plans.
As you will be aware, at the end of June the Government approved the basic guidelines for the Federal Budget. Now the specific programmes and projects are being identified which will be financed in 2010.
By tradition, the regions take an active part in this work. I see today's meeting as one of its stages.
I would like to stress that we are to adopt very stringent budgets for 2010. Because of the crisis the revenues at all the levels of the budget system have dropped; that applies to the federal, regional and municipal budgets.
Incidentally, in the first half of the year the tax and non-tax consolidated budget revenues have somewhat diminished. True, the consolidated regional budget still registered a surplus of 99.6 billion roubles. But that is not to say that we have no crisis.
Under these circumstances it is necessary to proceed from the real opportunities and the national interests. Let me be clear: Any manifestations of populism and wastefulness are counter-productive and simply dangerous. And of course all the budget processes at all levels should be synchronized and should fit into a common framework.
It is our conviction that budget money should be used above all to meet the social commitments before the citizens of Russia and to create conditions for post-crisis recovery and development of the economy.
Overall federal budget spending will not diminish in 2010. As you know, we expect a deficit of 3.2 trillion roubles, or about 7.5% of GDP.
Under the Federal Law on the 2009 Budget expenditure is 9.692 trillion roubles and the 2010 target is 9.822 trillion roubles.
Regarding the deficit, this is the maximum ceiling on the deficit that we can afford. Moreover, it will have to be gradually, but substantially reduced as early as 2011 and 2012. We would like to bring it down to 3%. Not more than 3% by 2012. That would guarantee macro-economic stability. Of course, we should balance the consolidated regional budget as well.
Next year more than 1 trillion roubles will be allocated to support the regions. That is a hefty sum which, in our opinion, will cover the priority needs of the Russian regions.
Naturally, the regional authorities will need to pursue a highly responsible budget policy. First, it is necessary to expand your own revenue base. As you know, it has been decided to raise the threshold for applying the simplified taxation system for small and medium-sized enterprises to 60 million roubles.
That, of course, will diminish somewhat the overall budget revenues. We are doing it consciously in order to create a better business environment. By the way, we believe it is the best policy in time of crisis. Of course, regional and local budget revenues may grow, but only if you create the necessary conditions for the development of small and medium-sized enterprises at the regional and municipal levels and if no obstacles and administrative barriers are erected, and the so-called "aliens" do not come under pressure on the local markets.
Our decisions regarding the transport tax, indexation of alcohol, beer, and oil excises, and state duties will strengthen the regional revenue base.
According to a Finance Ministry estimate, these measures will bring an extra 96 billion roubles to the consolidated budgets in 2010.
Some regions are planning to resort to borrowing too. That may be reasonable in the current situation, but one should incur debts carefully. I seriously urge you to be careful. Unfortunately, we have had some negative experiences recently. If you make debts this year what you will do about these debts next year is beyond conjecture.
If you think that we will "inject" billion of roubles to redeem the debts, like we did with regard to some regions this year, this may not happen.
As an alternative, we will continue the practice of granting the regions three-year budget loans at very low interest rates. Of course, this will be done above all for regions with low budget revenues.
We have been talking with the Governor just now and he lamented the fact that because his region is doing well the Finance Ministry does not give it anything. These are the rules and they are fair. Such regions will need help, but in other ways. Those who work well will be encouraged, and there may be a variety of instruments for that.
Secondly, it needs to be borne in mind that the crisis has affected different regions to different degrees. The hardest hit are the regions whose industries were oriented towards external markets.
It is therefore necessary to take another hard look at the method of distributing subsidies and equalizing the budget sufficiency levels with due account of the changes that have taken place in the regional tax potential. I would like to stress that the overall size of the fund for financial support of the regions will not be cut.
The practice of allocating subsidies to balance regional budgets will be preserved. The subsidies will be diminished somewhat, but the practice will be preserved. Incidentally, we in Government have already decided to allocate additional subsidies of 70 billion roubles to 29 regions of the Russian Federation and on Saturday I signed a Government decree to the effect.
Third. One of the Government's unquestioned priorities in the sphere of relations between budgets of different levels is financial support of delegated federal powers. The largest of them are spending on housing and utilities discounts for veterans and disabled persons and the exercise of powers in the sphere of employment.
Subvention for housing and utilities rates in 2010 will amount to 102 billion roubles. Federal budget spending on employment will increase from 77.5 billion roubles in 2009 to 88.7 billion roubles in 2010.
In this connection I would like to ask the heads of regions present here to assess the effect from the measures and programmes to combat unemployment and to report how you propose to work in this field in 2010.
I would like to stress that the key areas of responsibility of the regional authorities are employment and ensuring public sector stability, the payment of wages, and targeted and prompt reaction to crisis situations at enterprises. It is inadmissible to shirk these problems. A superficial attitude to these problems is inadmissible. Unfortunately, I have encountered such attitudes: "I know, I know, everything is all right." One should seek to gain an insight into the problem and deal with it personally.
Fourth. The quality of budget planning at the regional and municipal levels calls for close attention. The system of regional priorities will have to be adjusted very carefully to renounce secondary and less significant or less urgent expenditures.
As for investments, they should be directed to complete the projects that are in the finishing stretch. Otherwise we may face the sad legacy of the past when projects dragged on endlessly. We have been there before and we should not repeat the same mistakes.
Further, it is necessary to do more to restructure the budget network, to get rid of superfluous or inefficient institutions and enterprises. Wherever practicable, the format of autonomous institutions should be used.
The reform of the housing and utilities sectors should continue, not only through structural change, but also through speeding up the solution of outstanding problems of capital repair, relocation of residents of dilapidated houses and introduction of resource-saving technologies.
As the experience of the Federal Housing and Utilities Reform Fund shows, investments in this sphere obviously have an anti-crisis effect, not only social because we help people when they need help, but also anti-crisis economic effect by creating tens of thousands of additional jobs.
At the same time I would like to draw your attention to the following. We often witness a directly opposite approach to setting priorities. Many regions are increasing spending on government, the salaries of officials and the like.
On the whole the consolidated regional and municipal budget spending on government bodies in 2009, a crisis year, has grown by 4% and in some regions by 25% and more.
I will name these regions: the Magadan Region, by 38%, the Republic of Ingushetia by 30%, the Novgorod Region, by 25%, the Murmansk Region, by 26%, Moscow by 27%, the Bryansk Region, by 27% and the Republic of Adygea, by 24%.
The following arguments are advanced: The overall load on the administration is growing, money is needed to pay for the work of anti-crisis groups, to organise monitoring and perform other additional functions. New pay rates are secured to address these tasks.
By the way, our federal agencies also sin on this side. That said, I would like to stress that in preparing the 2010 budget we dramatically cut the spending on federal agencies. Some have been wondering whether they will be able to perform their functions; well, I am sure they will.
How big are the cuts for some ministries?
Alexei Kudrin: We have already made a 30% cut this year and will make a further 15% cut next year.
Vladimir Putin: Imagine, a 35% cut and even 40% cut for some ministries.
Still, I am sure that they will manage. And you too will manage, I have no doubt about it. And this is what I would like to ask the Finance Ministry to do: in deciding to allocate aid to the regions look at how effectively these regions are trying to cut down their expenses.
Anti-crisis management is about internal redistribution of resources and personnel, economy at the expense of less urgent matters and not about inflating staffs and cost estimates. We are urging everyone to live according to their means, and, as I said, we should begin with ourselves.
As we have agreed, the regions should have optimised their budgets linking them closely with the fulfilment of their anti-crisis programmes. I expect to hear reports on the progress in this work at this meeting today.
And one more thing. It is essential to make effective use of the competitive advantages of each region. We are holding this meeting in Kislovodsk, a health resort, and it would be appropriate to speak about the cultural and natural potential, the historical heritage and the development of tourism inside the country.
Incidentally, considering a drop in foreign travel Russian resorts are full to capacity. The important thing is to keep up the quality and to keep the prices affordable.
Internal tourism is becoming increasingly popular. Beginning from 2000 the number of people who spend their holidays at Russian resorts has grown by 2 million.
We have included that as a separate item on our agenda today, and Tatyana Golikova will make a report on this. We will look at the evolution of special economic zones created to boost tourism; we have seven such zones already.
We shall also see what additional steps are necessary to develop sanatoria and medical complexes, holiday resorts and the tourist business, including small and medium-sized businesses.
Let us get down to work.
