Transcript of Meeting with the Government Cabinet 2008-04-28 20:14:02 The Kremlin, Moscow Regional Development Minister Dmitry Kozak on the Housing and Utilities Reform Fund’s activities Regional Development Minister Dmitry Kozak: Since the fund began work, 16 regions have drawn up programmes for housing and utilities reform, capital overhaul of housing stock and elimination of housing stock unfit for habitation, and have received subsidies from the federal assistance fund… President of Russia Vladimir Putin: They have drafted programmes and received money, but how are they actually spending this money and what are they actually doing with these programmes? Dmitry Kozak: They have begun implementing the programmes. Work to monitor how this money is being spent is fully underway in all of these 16 regions. Vladimir Putin: Tell us loud and clear specifically what this money will be spent on. Dmitry Kozak: This money will be used to eliminate housing stock unfit for habitation. The money that has already been transferred will be used to resettle 20,000 families from housing unfit for habitation and carry out capital overhaul of housing that is home to more than half a million families. We expect that a total of 49 regions will receive subsidies this year. By the start of next year, all regions will have begun work on housing and utilities reform, capital overhaul and elimination of housing stock unfit for habitation. Vladimir Putin: What is the approximate amount of money you plan to spend this year? Dmitry Kozak: This year we have planned for 40 billion roubles in subsidies. Vladimir Putin: Forty billion. How big is the fund overall? Dmitry Kozak: All in all we have 240 billion to be spent over four years. Vladimir Putin: How are the currently free funds being used? Dmitry Kozak: The currently free funds have been deposited with the Russian Central Bank at 3.5 percent annual interest. Vladimir Putin: At 3.5 percent annual interest? This means they will start to dry up given that inflation is higher. Dmitry Kozak: This is until July 15. A law will be passed on Friday making it possible to place the funds with commercial banks at more advantageous terms. Vladimir Putin: Ah, that’s just what I’m getting at, because if the funds are to be spent at this pace they will be nibbled away at by inflation (it’s easy to calculate how) and we will end up losing money. I therefore ask you to look into this problem together with the economy officials and the Finance Ministry. Deputy Prime Minister and Finance Minister Alexei Kudrin on placing temporarily free Federal Treasury funds and on the situation on financial markets Deputy Prime Minister and Finance Minister Alexei Kudrin: The second auction for the placement of temporarily free Federal Treasury funds took place last week. This was also a signal and a test of the liquidity situation on the market. Ten banks took part in the auction, which resulted in the placement of 17.7 billion roubles. The auction showed that banks have sufficient liquidity at the moment to take care of their current needs. April also provided us with a new assessment of monetary and credit policy. In the first quarter we saw an outflow of capital with around 22 billion dollars leaving Russia. This was linked to the crisis on the world markets and demand for liquidity from Western investors and banks, which led to an outflow of capital primarily from the developing markets. But according to our assessment conducted together with the Central Bank, we had capital inflow of around 10 billion dollars in April. Furthermore, high oil prices have increased this inflow through current transactions. As a result, around $25 billion has entered the country and been purchased by the Central Bank, which indicates the continued development of our gold and foreign currency reserves. The Central Bank issued a correspondingly appropriate amount of money, which has entered the economy. According to our assessment of the situation therefore, the Russian economy has sufficient funds and liquidity. Deputy Prime Minister Alexander Zhukov on the work of the International Olympic Committee (IOC) commission inspecting preparations for the 2014 Sochi Olympics Deputy Prime Minister Alexander Zhukov: This was the first visit by the International Olympic Committee’s commission. They will be coming once a year. Practically all the work is going according to plan. We reported to the commission on all the different areas, including the construction of facilities, transport provisions and the security and environmental programmes. At the final press conference, Jean-Claude Killy [chairman of the IOC’s Coordination Commission], said he was satisfied overall with the way preparations are going. The commission considers that we are keeping to the approved timetable and that we are respecting all of our contractual obligations with the International Olympic Committee, although there are a number of issues that need to be resolved. Foreign Minister Sergei Lavrov on the upcoming meeting of the EU-Russia Permanent Partnership Council Foreign Minister Sergei Lavrov: The EU-Russia Permanent Partnership Council will hold a meeting of foreign ministers tomorrow in Luxemburg with the EU ‘troika’ representing the European Union. The main item on the agenda is preparations for the upcoming Russia-European Union summit in Khanty-Mansiisk in June. Interestingly, we are getting signals that the European Union has now largely settled its problems with approving a mandate for beginning negotiations on a new strategic partnership agreement between Russia and the EU. We are ready for these negotiations. We already confirmed the directives to our delegation six months ago. If everything goes as expected (that is, if the signals we are getting from our EU colleagues prove correct), we might be able start the negotiating process very soon and announce it at the summit in Khanty-Mansiisk.