Taking part in the meeting were Prime Minister Mikhail Mishustin, Chief of Staff of the Presidential Executive Office Anton Vaino, First Deputy Prime Minister Andrei Belousov, Deputy Prime Minister – Chief of the Government Staff Dmitry Grigorenko, Presidential Aide Maxim Oreshkin, Minister of Economic Development Maxim Reshetnikov, Minister of Finance Anton Siluanov, Governor of the Central Bank Elvira Nabiullina, and Chief of the General Staff of Russia’s Armed Forces – First Deputy Defence Minister Valery Gerasimov.
President of Russia Vladimir Putin: Good afternoon, colleagues,
Traditionally, during the middle of the summer we begin working on the new federal budget. And today I asked you to meet in order to discuss the priorities of Russia’s main financial document for the upcoming 2021 and the 2022–2023 planning period. Of course, such analysis must also consider our new tasks as well as trends and challenges the entire world and, of course, Russia have to face today.
The coronavirus epidemic and related restrictions have practically frozen the global economy. A lot of manufacturing and construction work stopped in most countries; the turnover of trade and services has fallen. The unemployment rate has gone up to a critical level in some places.
I have already provided the number for Russia: as estimated, in April, when a period of non-working days was introduced, the Russian GDP decreased 12 percent; in May the decrease was 10.9 percent.
The situation required our immediate response. Of course, we had to help certain economic sectors, enterprises and businesses in general as well as employees of enterprises and organisations and to pass this difficult crisis stage and preserve Russian families’ incomes.
Of course, for objective reasons it was impossible to resolve all problems. The crisis was too deep, and people felt its serious negative consequences.
This is why it is so important that owing to the responsible budgetary, monetary and credit policy pursued in previous years, and the reserves we accumulated in the past, we had an opportunity to make timely, pin-point decisions. I would like to emphasise that these were pin-point decisions. By all appearances, we managed to hit the right points albeit not without problems or setbacks. But we still made these decisions straight to the point, including direct payments to families with children, increased unemployment allowances, tax write-offs, and additional orders for companies of key industries, to name a few.
As I have already said, the scale of support for our people and business during the epidemic has obviously become unprecedented for this country. Yes, I know the figures for other countries. I am well aware of them. We always compare our actions to what is being done by our partners, neighbours and friends. But there are grounds to say that in general we achieved what we wanted with our pin-point decisions.
Today, it is possible to say that these measures have produced results and largely helped us mitigate the crisis. Now that restrictions are being lifted, Russia is gradually restoring its economic activities.
Let me say it again: some countries provided a lot more aid, but we reached the goals we set. This is very important. We are seeing how the consumer demand is recovering today. In June-July, the purchase of goods and services exceeded the pre-crisis level of February. I think the increase is already about 4 percent – 3.8 percent, to be exact.
Electricity consumption is an important indicator that points to the restoration of the real economy. In May-June, it was much lower than before the crisis, but now it is approaching this level.
At the same time, and I have already drawn the attention of my colleagues from the Government to this, there are still problems in the labour market. True, our unemployment rate has grown much less than in some other countries, but it has still increased.
Many enterprises and companies have resumed normal operations, cancelled part-time work and have requested their employees to return back to their jobs from leaves of absence. However, the unemployment numbers, I will say it once again, remain high. To date, about three million people are registered with employment services.
Everything is clear here, too. After we significantly raised the level of unemployment benefits, many people who had not worked before for a number of reasons and had not visited the appropriate centres to claim these benefits, started turning up. Still, this gives the real picture of the labour market and shows that they are still unemployed.
Now, the most important goal of the economic policy is to restore the employment levels and give people an opportunity to work, to earn money, and to provide for their families. I will stress again that the labour market must be fully restored in 2021.
All avenues must be used to improve the employment situation and to raise income levels, including, of course, the federal budget.
Its priorities should go beyond the tasks at hand. Importantly, based on the experience that we gained in the previous months, additional budget funds should be earmarked for our long-term strategic plans and national projects, including basic areas such as healthcare, education, infrastructure and maintaining the country’s defences. We must pay attention to the decisions that were made earlier.
As you may recall, Presidential Executive Order 604 of May 7, 2012 provides for keeping the monetary allowance for the military personnel, quote, “not lower than the level of remuneration of the employees working in the leading sectors of the economy.” It is just an example. However, our previous plans in the essential sectors should not only be kept in mind but be acted upon. We must be guided by this approach in our future work.
Colleagues, I would like to draw your attention to the fact that the decisions I just mentioned should not just be marked as made and forgotten in connection with the most recent problems. These decisions must be implemented. We must bear in mind that in connection with the adoption of the Constitution – our citizens made these decisions regarding the Constitution of our country – we must take into account their sentiment specifically as it applies to the three-year budget period. It must be consistent with the spirit and letter of the updated Constitution and people’s needs.
Of course, it is important to continue to maintain a responsible fiscal policy, including both the budgetary rule and inflation targeting, in order to be able to accurately balance and improve the stability of the entire public finance system.
Let us get down to our discussion.