06.11.08

The Russian government's task today is not reinstating the presence of the state in the economy and it cannot be otherwise, Russian Prime Minister Vladimir Putin told an economic conference on Wednesday.

"The expansion of state presence in the economy is a forced measure and a temporary one," he said at a meeting with key economics-related members of his Cabinet. "The stabilization measures the government has been taking are geared to minimizing the effects of the global financial crisis on the Russian economy. Many of those measures are not quite typical of a market economy. But our foreign partners follow the same logic. You know this well enough."

In strategic terms, said the head of the Cabinet, "we shall keep putting the emphasis on private enterprise and the creation of favorable conditions for drawing both domestic and foreign investors in order to ensure sustainable economic growth."

"For this reason all of our actions should be evaluated not the from the standpoint of solving last-minute problems, but from that of their long-term effects on the Russian economy," he said.

It is of the essence to maintain stable operation of the key industries in the real sector of the economy. First and foremost this applies to construction, system-forming retailers, farming, small businesses, the defense-industrial complex and the oil industry.

"Stabilization measures will be developed and proposed for each of these spheres," the prime minister said.

The practical implementation of the stabilization measures is already underway or is due to begin shortly.

As far as housing construction is concerned, Putin recalled the decision to buy out high-completion-rate housing stock to provide homes for the military and go ahead with slum clearance schemes.

Another measure to be taken along these lines is an increase in the charter capital of the mortgage lending agency.

In agriculture, the registered capitals of Rosselkhozbank and the Rosagroleasing company will be increased, higher costs of fuels and lubricants compensated for and an extra 20 billion rubles injected into the dairy products and fertilizer production programs.

"Small businesses will be getting greater support from the federal budget. This measure is still in the discussion phase. I am for this proposal by the Economics Ministry and I would like its adoption to be speeded up," Putin said.

In the oil industry, taxes are to be eased.

"Naturally, support for the financial system and the real sector of the economy will require heavy budget funding," Putin acknowledged. "The amount of such spending must be adequate to the scale of emerging problems - half-baked measures will not work."

At the same time he warned against going beyond the bounds of budget restrictions.

"In that connection the task of raising the effectiveness of budget spending, both current and extra ones, acquires special importance," he said.

The prime minister reminded the banks they should funnel the government resources they get into loans extended at normal, fair market prices.

"Market rates are not equivalent to speculative ones, those used to derive super-profits. Of late, prompt measures were taken to protect the country's financial system. The state provided extra liquidity for the banking sector. The banks must use these funds to funnel these cash assets into the economy at normal, market rates. The necessary instructions have been issued and the Finance Ministry and the Central Bank will strictly control compliance."

Taking part in the meeting were all of the eight deputy prime ministers, presidential aide Arkady Dvorkovich, Economic Development Minister Elvira Nabiullina and the heads of the Central Bank, Sberbank, Vnesheconombank and VTB.

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Source: Itar-Tass