Russian Money Will Work in Russia
OREANDA-NEWS. November 1, 2008. Vladimir Putin's opening address: „We have made a package of decisions to reduce the impact of the global financial crisis on the Russian economy.
These decisions are certainly not cure-alls. The Government and relevant ministries continue to analyse the situation. We have met with industry and business representatives, and Russian company and bank managers to better understand the problems of the national industry and to pinpoint the most urgent issues.
As a result, following the President's instructions, we have drafted a comprehensive plan to back the national industry, especially its key branches. We are here to approve it. The package will form the basis for a concerted effort by the Government, federal agencies and the Central Bank to cope with the global financial crisis.
The plan is no dogma but a document open to corrections and amendments as things change in the global and Russian economy. So I am calling on all agencies to monitor the situation and propose additional measures when necessary.
The plan consists of three principal parts.
The first is the development of the legal basis to protect investors' and creditors' lawful interests and to prevent corporate bankruptcy. In particular, we will enhance the transparency of corporate reorganisation and modernise legal mortgaging. Plans have been laid out, and I hope we will settle the matter with the State Duma as soon as possible.
Our goal is to back investment projects. Russia is strong enough not to give up essential investment programmes already launched. They will proceed regardless of the problems. However, we do need to reappraise their effectiveness and adjust their financial characteristics. This concerns projects on the federal targeted investment programme, and the programmes of natural monopolies and other leading corporations, some of them with government share.
Another part of the plan envisages energising the most effective forms of supporting companies in many economic fields. With this, the state will promote, not assume private initiative-I want to emphasise that. We are meeting entrepreneurs halfway. Business, for its part, should maintain a civilised and straightforward approach. It should maintain the quality of corporate management and remain responsible to consumers, society and the state.
Construction, engineering, the military-industrial complex, the raw materials sector, retail trade with its essential social function, and agriculture are the first entitled to assistance.
Russian industrial exporters need enhanced incentives. We will not shelve decisions made by the preceding Government meeting regarding foreign economic policy. Exchange policies should not hit our industrial complex, while at the same time importers should not enjoy excessive benefits.
Certain industries, mainly automotive and agro-industrial, will have all customs tariff protection they need.
More than that, I deem it possible to establish temporary preferential prices for Russian-based suppliers in government and municipal purchasing. It is also worthwhile to increase subsidised interest on industrial modernisation loans.
The third part of the plan calls for greater assistance to small and medium business by extending the government programme of regional support and providing loans through state banks. Such loans should be increased when necessary. We must extend preferential terms to small and medium enterprises for leasing federal property. Such businesses also need greater access to government contracts.
All these measures won't work unless we stop speculative capital outflow from Russia. Businessmen want their own quasi stabilisation fund and insurance against tentative additional hazards if the global situation worsens. I see their point. However, shifting to foreign currency is no guarantee, with similar problems in Western markets.
More to the point, we are not making these huge government allocations to export capital. I repeat, Russian money will work in Russia, and any sign of corporate economic selfishness will have consequences.
We must suppress any attempts to export allocations intended for the Russian industry to the currency market. So I think it is correct to toughen Central Bank control over the management of banks having access to government allocations. Our plan includes such measures.
I would like to say in conclusion that the plan demands major legislative work. Please prepare the necessary drafts and start discussions with the State Duma immediately. The plan needs broad publicity. It should be edited and appear on the Russian Government website within a few days.“