President of Russia Dmitry Medvedev: We both took part in the G20 summit not so long ago. A number of decisions were made there. We agreed to work in coordination with the other major economies and the main international financial organisations to take collective efforts to minimise the effects of the global financial crisis.
What steps are being taken, and what proposals have been made in this area?
Deputy Prime Minister and Finance Minister Alexei Kudrin: At the London summit, the G20 decided to increase the international community’s resources for supporting countries in need, and set a target figure of $1.1 trillion, including $500 billion to bolster the International Monetary Fund’s (IMF) reserves. The remaining funds will be used to increase the resources of regional development banks, and support exports, international trade and other revenue sources in order to ease the crisis impact.
A number of European Union countries and other countries have already announced their intention to contribute to increasing the IMF’s resources. The International Monetary Fund, for its part, has proposed a number of financial instruments that would be advantageous and convenient for countries prepared to make funds temporarily available to the IMF in the form of credit resources or loans for supporting countries in need.
Following consultations with the International Monetary Fund and with our colleagues from the BRIC group [Brazil, Russia, India, China], we have drawn up requirements and conditions regarding the nature and quality of the financial instruments in which Russia could temporarily invest funds during the crisis period. These conditions have been met overall, and these funds will thus be able to be used to support other countries.
What we are talking about is bonds issued by the International Monetary Fund (two types of bonds have been settled on). These are highly liquid bonds that in terms of meeting correspondent requirements and in terms of their reliability are equivalent to gold and currency reserves or to bonds in which gold and currency reserves can be invested. Discussions are underway now in the Government on the possibility of investing up to $10 billion in International Monetary Fund bonds. The Russian Central Bank will make this placement. As I said, their reliability, liquidity and possibility of return correspond to those of the most reliable liquid securities on the markets today. These funds will help to support and make loans available to countries in need today.
We are also working in other areas on providing support to countries in need. The Eurasian Anti-Crisis Fund is one instrument that we will be able to use. At the meeting of the EurAsEC [Eurasian Economic Community] finance and economy ministers in Moscow last week, we approved a draft agreement on setting up this fund and approved the fund’s draft provisions. These documents have now been sent for approval to the EurAsEC heads of government. We hope that this fund will be established at the start of June, will go through the ratification process in the different countries, and will start operating from the middle of this year.
There are also the efforts Russia is making to help its neighbours, and support them in their anti-crisis measures. We signed an agreement last week to make a $500 million loan to Armenia for 15 years. The money will be transferred this week. A little earlier, about three weeks ago, we signed an agreement with Kyrgyzstan for a $300 million preferential loan and a $150 million grant, and these funds have already been transferred.
Dmitry Medvedev: Good. The crisis is a difficult situation of course, and it is having an impact on all economies, on the Russian economy too. But at the same time, despite the difficulties we are experiencing, we are a big country and we have made a number of commitments, including in the G20. I think the efforts we are making are entirely justified. In this respect, the use and acquisition of the kinds of financial instruments you refer to is indeed a means of carrying out the plans and obligations that we have committed ourselves to. I hope that this money will indeed be spent on overcoming the effects of the global financial crisis and will support countries close to us, including countries that have suffered the most from the crisis.
As for implementation of earlier decisions, including the decision taken by the EurAsEC leaders on establishing the EurAsEC Anti-Crisis Fund, it is good that the first stage of work is complete and the documents are ready for signature. I hope that this fund will indeed commence work in the middle of the year. I know that my colleagues, the EurAsEC leaders, have expressed their interest in using the instruments this fund provides.
As for our bilateral relations with Kyrgyzstan and Armenia, we are helping these close partners of ours through the decisions we have approved together, and this support will continue.