President of Russia Dmitry Medvedev: Alexei Leonidovich, last week I met with several ministers concerning the development of one of our federal regions. Naturally, we gave a number of instructions. Today we will talk about this and tomorrow will hold meeting with members of the government cabinet in an expanded format.
I would like you to report to me on how things are going with regards to the implementation of presidential orders to support the real sector and on social programmes to stabilise the financial sector, because a number of orders issued have already been executed – this is good: some orders are being executed and others should be executed as soon as possible.
Deputy Prime Minister and Finance Minister Alexei Kudrin: Dmitry Anatolyevich, we have already put a number of your orders on paper and these draft bills are now being introduced to the State Duma. Tomorrow the State Duma will hear the first reading of a number of bills. We are confident that these bills will pass the Duma and the Federation Council before the end of the year, and after you have the opportunity to sign them they will be implemented as of the 1st of January.
I am referring to draft bills about special representatives of the Central Bank in commercial banks. These special representatives will have access to all of the banks' information and all transactions valued above one percent of book value …
Dmitry Medvedev: The banks' assets.
Alexei Kudrin: This will be sufficient supervision and a bank has no right to refuse information to this representative.
Dmitry Medvedev: We agreed that on the one hand this representative will actually oversee the spending of the money that has recently been allocated by the state. At the same time, of course they will not interfere with the operational activities of the bank. The bank remains the best structure in which to accomplish its tasks, but under this type of supervision.
Alexei Kudrin: In addition, tomorrow the State Duma will deal with a number of bills, especially the laws on the Tax Code and Budget Code. In accordance with your orders, we have reviewed the revenues of the subjects of the Russian Federation in light of a number of tax initiatives. Accordingly, we are changing a number of taxes from the federal to the regional level in the Tax Code and the Budget Code. Therefore, the regions will receive more than 100 billion rubles (more than 3.6 billion USD).
There is also a draft bill on additional measures to provide credit to the real sector. Currently the most difficult thing facing businesses is the development, recovery and servicing of old loans as well as obtaining new loans. For that reason the state will share responsibility with the enterprises and banks for obtaining and providing such loans, and therefore banks will be more willing to take risks. We will give businesses more than 300 billion rubles (about 11 billion USD) that they have can get credit on from banks. Along with this there are two separate groups: the defence industry will receive guarantees of 70 percent and any other sector in which the state is not involved will receive guarantees of 50 percent.
Dmitry Medvedev: 70 and 50 percent of what?
Alexei Kudrin: Of the total loan.
Dmitry Medvedev: How will you determine the lucky recipients of this kind of guarantees?
Alexei Kudrin: All companies that participate in the state defence order are eligible to receive guarantees of 70 percent.
The list of the remaining companies will be finalised and approved tomorrow at the Governmental Commission for the Sustainable Development of the Russian Economy. This list will be determined according to several criteria, including in light of which businesses have a major impact on the economic system and their respective sector, the main taxpayers, core businesses, and enterprises using special technology that counts among those that we must not lose.
Dmitry Medvedev: Approximately how much does this represent in terms of Russian GDP?
Alexei Kudrin: We think that given the businesses we will select tomorrow, and the similar selection that we will suggest be carried out at the regional level, the total amount – including budgetary institutions – will cover 85 percent of GDP. Thus all the major players will be supported.
In addition we have a special programme to finance small and medium-sized businesses and a special programme for lending to agriculture.
Tomorrow we will also be make a decision concerning the draft laws on facilitating investment in the Russian Federation with public funds. Our task is to increase the powers of the ministers and main distributors of budgetary funds to be invested in approved federal programmes.
Dmitry Medvedev: In other words we will be expanding the powers of the principal distributors of the loans, in this case the ministers.
Alexei Kudrin: We will ask them to assume more and more responsibility for the final result. As a result there will be no bureaucratic delays. Already on January 1st all programmes must begin to work.
Dmitry Medvedev: Do you see this as part of anti-crisis measures, or is it a long-term plan, regardless of how quickly the global financial crisis might be overcome?
Alexei Kudrin: This package that extends the powers of investment is not only linked to the crisis. It will operate even after its resolution; in other words this is systemic work to improve the flexibility and efficiency of the state funds investment.
At the moment we are also preparing a series of measures to support various sectors, including the banking sector and the real sector.
Dmitry Medvedev: Good.
Alexei Leonidovich, I have the following order for you and the government cabinet. Last week I spoke with our colleagues in the regions and noticed that they are generally willing to effectively collaborate with the cabinet – this is the most important thing. But you need to be sure: when you take important decisions it is necessary that a similar set of measures to support industry, agriculture and trade be approved at the regional level. During a financial crisis of course everyone has been through a lot, but they have the ability to do so. It is desirable that the measures taken by the cabinet be complemented by measures taken in the regions. I understand that you have always been a supporter of such concerted action in the financial sector. Now it is necessary to ensure synchronization and the interchangeability of these measures.
Alexei Kudrin: We will do so.