President of Russia Vladimir Putin: Good afternoon, colleagues,
We will hear from the Economic Development Minister today, who will tell us about the structural measures needed to get back on the sustainable development track.
But first of all, we have a few routine matters concerning the work of the Presidential Executive Office, the Government, the regions, and the parliament. Unfortunately, the Energy Minister is not here today, he was in Brussels, talking with our colleagues there about our relations with Ukraine in the gas sector. Ukraine’s prepaid gas supplies will only last another two days. Nothing is being done. I ask the Prime Minister and Gazprom to give this matter more attention, keeping in mind that no one wants a return to the conflicts of past years, and we are ready to carry out all of contractual obligations, but strictly on a prepaid basis.
Another matter concerns the need to change the budget parameters. The changing circumstances in our external relations have made this necessary. A new version of the budget has been drafted, based on a lower oil price of $50 a barrel, an exchange rate of 61.5 rubles to the dollar, and no possibility of raising financial resources on international markets.
We will need to make the necessary amendments to the budget law. I know that the Government worked long and hard on this. You need to continue working in this same way now with the State Duma deputies.
Now I would like to ask the Finance Minister to comment on the situation. Please, go ahead.
Finance Minister Anton Siluanov: Mr President, colleagues,
The Government will examine amendments to the budget law tomorrow. We have drafted them to take into account the new macroeconomic prognosis and external circumstances. The amendments will change the budget parameters that we approved earlier.
Budget revenue will decrease by 2.6 trillion rubles and spending will drop by 300 billion rubles. This is a decrease of just two percent for spending and of 17 percent for revenue. The deficit will rise accordingly. We are planning for a deficit of 2.8 trillion rubles next year, which increases from 0.6 percent to 3.8 percent of GDP. This is clearly the result of lower revenues from export duties and the subsoil resources tax, in other words, the taxes that are linked to revenues generated by foreign economic activity.
We propose redistributing resources within the budget, in other words, defining the budget priorities. Redistribution would involve more than 1 trillion rubles. What we have thus done is to trim spending in some areas for a little more than 1 trillion rubles and increase by a similar amount the resources needed to take anti-crisis response measures.
We raised pensions and took into the account the funds needed to implement the anti-crisis programme. Support will be provided to some economic sectors and regions. In other words, the amendments to the budget law take into account all of the measures that we need to implement fast.
If we had not carried out this optimisation of nearly 1 trillion rubles, the deficit would have grown from 3.8 percent to 5.2 percent of GDP and we would have lost even greater reserves.
We propose using 3.7 trillion rubles from the Reserve Fund. This includes the 500 billion rubles that we originally planned to use – the Government had the right to use this sum over the current year. The deficit will therefore be financed primarily by the reserve funds that we built up over previous years.
We expect the Reserve Fund to contain 1.7 trillion rubles at the end of this year. Our task now therefore is to finance all priority commitments through the reserve funds, and at the same time to prepare solutions that will enable us to adjust and plan the 2016–2017 budgets under new conditions.
We need to start right now revising the forecasts for 2016–2018, evaluate our possibilities and plan spending decisions that we will need to examine in conjunction with our tasks, priorities and the possibilities at our disposal. To do this, we will need to draft and submit during the spring session a number of decisions that will enable us to meet our basic goal as far as the budget is concerned – making sure we have a balanced budget in 2017.
We are therefore taking the following policy approach. We are responding to the new situation and making spending decisions in accordance with the Government’s anti-crisis programme to help vulnerable population groups and provide support to the regions, which is important too. We therefore need to set the priority now of ensuring a balanced budget over the medium term in order to preserve our reserves and organise how to meet our commitments in the new situation. These are the principles underlying our amendments to the budget law.
Vladimir Putin: When will you send the amendments to the parliament?
Anton Siluanov: We will examine the amendments this week. I think that if the Government gives us a week to finalise them, this would be enough for us to make any needed adjustments to take into account the discussions and their outcome, and we will be ready to send the document to the parliament.
Vladimir Putin: Good, thank you.
Public pharmaceutical supply remains a pressing issue. Ms Golodets, what is happening in this area?
Deputy Prime Minister Olga Golodets: Mr President, a resolution has been adopted concerning the new list of vitally important pharmaceuticals for 2015. The list has been expanded in order to stabilise the pharmaceuticals market in Russia and now includes 50 additional essential pharmaceuticals to treat cancer, orphan diseases, diabetes and a whole range of nosologies.
Currently, the list of vitally important medicines includes 608 pharmaceuticals that cover all the main nosologies and all major diseases. Following the adoption of this document, we can say that we now control a significant share of the market: 608 medicines out of 2,935 available on the Russian market. It is very important that of these 608 medicines, 413 are produced in Russia.
And today, Russian manufacturers say they are ready to go further with localisation on Russian territory and are interested in extended contracts – the issue we have discussed, meaning seven-year contracts. They are ready to sustain prices in the future and localise production under such long-term plans.
We are currently working on this objective in the Government. I think we will be able to resolve it fairly quickly, in order to provide medicine to our market.
Vladimir Putin: That is what they said: long-term contracts in exchange for lowering prices?
Olga Golodets: Yes.
Vladimir Putin: The spring field work is beginning. Mr Fedorov, are there any unresolved issues? This is a very important question.
Agriculture Minister Nikolai Fedorov: Overall, spring field work traditionally involves many problems for farmers both in Russia and abroad.
In describing the work with the regions and for the regions, I can say that while we invested 32 billion rubles from the federal budget last year, today this figure is 98.5 billion rubles. In other words, at the moment the Federal Treasury’s regional offices hold three times more federal money on their accounts.
Last year, the regions provided 686 million rubles to agricultural producers; this year, the figure is 7,836 billion. That is a more than a 10-fold increase. Another form of support amounted to one billion last year, but is at 7.6 billion rubles this year.
Also, the system adopted by the Russian Government in January has begun to work, and we have significantly increased federal support for all loans – subsidies to repay short-term and investment loans. Today, the reimbursement rate from the federal budget for short-term loans is 14.7%, plus up to one third for the refinancing rate. As a result, we are reimbursing 17.4% of all the costs for spring and field work under short-term loans.
A week ago, at a meeting with the Prime Minister, we stated that lending is lower than last year by 30%, but over this week, lending through both Sberbank and Rosselkhozbank has surpassed last year’s level. So overall, the Russian regions embraced the new parameters and the new conditions, and according to our assessments, the interaction system is operating very dynamically.
Of course, there are certain drawbacks. We are currently working actively on closing the seed deficit. Our seed supply level is higher than last year, with good indicators due to a good harvest. But three regions – Altai Territory, Orenburg Region and Kurgan Region – were struck by natural disasters last year. To minimise the problems with seeds and other resource materials, we decided to provide assistance to these regions in the next few days to help them overcome the effects of last year’s adverse situation – that’s about 2.6 billion rubles out of the 50 billion rubles in the Reserve Fund that the Agriculture Ministry has at its disposal.
Good news is that the total area of winter crops damaged last autumn is decreasing. Indicators for the Southern Federal District have improved by 400,000 hectares. This will give us more than 2 million tonnes of extra cereal crops.
According to our current forecasts, we are expecting a harvest of 100 million tonnes of grains. Overall, there is reason to assess the situation as satisfactory.
Vladimir Putin: The fact that funding is being allocated in such amounts is good, but we need to balance the allocated funds with an increase in seed prices. If there are enough of them, that’s good too. But we must see whether the money allocated cover the price increase for our seeds and imported hybrids. And mineral fertiliser prices are also rising. This should also be kept in mind. The absolute figures are impressive, but they need to correspond to all other parameters of economic activity.
Nikolai Fedorov: There have been very intensive discussions on mineral fertilisers between the Government, Industry and Trade Ministry and Agriculture Ministry and fertiliser manufacturers’ associations. Agreements have been reached on discounts as high as 33%, and today, the prices are acceptable. At our meeting a week ago, our fertiliser availability was lower than last year, but today we have increased it by lowering prices.
We have tripled subsidies this year for elite seeds, to subsidise elite seeds. And given the 50 billion rubles, in making amendments to the law, we even expect to increase support for elite seeds, including hybrids – those imported seeds, six-fold.
Vladimir Putin: And what about fuel and lubricants?
Nikolai Fedorov: There has been a 3.6% decrease in diesel fuel prices since the beginning of the year, and a 5.8% decrease for oil; but there are questions in certain regions – Krasnodar Territory, Sverdlovsk and Novosibirsk regions. There was a slight increase last week, but we will sort it out with the Energy Ministry, the Federal Anti-Monopoly Service and other agencies.
Vladimir Putin: Ok. Thank you very much.
And a few words about working with the regions in the Far East, regarding priority development areas. Have corresponding decisions been made? What is happening there?
Deputy Prime Minister and Presidential Plenipotentiary Envoy To The Far Eastern Federal District Yury Trutnev: Mr President,
We are currently working on creating the regulatory framework necessary to implement the law. It will be completed by the end of March.
Meanwhile, in order not to waste time, we have begun to select priority development areas and investment projects. At the subcommittee’s first meeting, three priority development areas were selected, two in Khabarovsk Territory – one in Khabarovsk and another one in Komsomolsk-on-Amur – and one in Primorye Territory, the Nadezhdinskaya site.
The site in Komsomolsk-on-Amur allows for practically doubling production of aviation spares through localisation. But the budget’s task is to help implement the project from the infrastructure point of view. We will need to build a school there, a children’s clinic, a road and a gas pipeline. This will create the necessary conditions for living and working in one of the Far East’s most important centres. Nadezhdinsk also has great prospects, with opportunities being created there for using the logistics advantages of the Primorye port.
In addition to the priority development areas, six investment projects have been selected: the Inaglinsky and Taezhny mining complexes in the Republic of Sakha (Yakutia), the transhipment complex at Vanino Port, coal mine and coal preparation complex in Khabarovsk Territory, mining and smelting enterprises at the Ozernovsky deposit in Kamchatka and in Selemdzhinsky district in Amur Region.
Mr President, it is important to note that these are the projects most ready for implementation. They will be giving returns by 2016 to 2017, and they will all be launched. The priority development areas will be created and will start operating within the same timeframes. In total, 23 billion rubles from the budget will be spent on creating these territories, while the private investment volume is 180 billion rubles.
Vladimir Putin: Do you need any additional help from the Presidential Executive Office or the Cabinet – for example, in working with regional leadership?
Yury Trutnev: No.
The one thing I would like to say is that in accordance with your instructions, we prepared a suggestion on holding the Eastern Economic Forum in Vladivostok. Our neighbours are quite interested in the Far East’s development and if you support this idea, we would like to send this suggestion to you.
Vladimir Putin: When? In August?
Yury Trutnev: August 12–15, 2015.
Vladimir Putin: It won’t conflict with the Sochi Forum?
Prime Minister Dmitry Medvedev: They are well spread apart, with about a month in between.
Vladimir Putin: Very well.
Yury Trutnev: Mr President, the last thing I would like to say is that this is only the beginning of the work; there are more than enough projects that are ready. We already have a tourism and recreation cluster in Kamchatka prepared for the next meeting – a complex, very interesting project – as well as the Beringovsky coal deposit in Chukotka, and a project to build new port terminals in Zarubino, Primorye Territory. So we will continue this work.
Vladimir Putin: Very well. Thank you.