Russian Health and Social Development Minister Tatyana Golikova
Photo: ITAR-TASS
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The Goverment Faces the Economy
Russian President Vladimir Putin met with members of the government yesterday and discussed inflation, the birthrate, the liquidity crisis and the mortality rate. Kommersant special correspondent Andrey Kolesnikov tried to find the connection between them in Russian life.
The ministers are supposed to be at the Kremlin at noon on Monday, but it has been three years or so since their meetings have started any earlier than 1:00. The new ladies, Minister of Economic Development and Trade Elvira Nabiullina and Health and Social Development Minister Tatyana Golikova, did not know that, however (although Industry and Energy Minister Viktor Khristenko could have told his wife), and were the first to arrive.
At 12:50, it became known that Putin had left his home. He arrived at the Kremlin eventually and entered the meeting accompanied by chief of the presidential executive staff Sergey Sobyanin, First Deputy Prime Ministers Sergey Ivanov and Dmitry Medvedev and Prime Minister Viktor Zubkov. The president suggested starting with macroeconomic indicators.
“Unfortunately, this means that we will end up exceeding our target figure of 8 percent for the year overall,” said Nabiullina. She explained that price rises on world agricultural markets were to blame for the situation, and they in turn were caused by the reduction or elimination of agricultural subsidies in Europe. She proposed to stimulate Russia agriculture to counteract the price tendencies. “We have submitted a draft resolution to increase duties on wheat and barley, and we are examining the issue of duties on milk and dairy products,” she noted.
“I will hold a meeting on protecting the foodstuffs market today,” the prime minister added. “The instructions to all the ministries and agencies are in effect ready. I think they can be issued today and work can start immediately.”
“Make sure there are no delays,” the president responded.
Finance Minister Alexey Kudrin showed his solidarity with Nabiullin by starting with the bad news as well. The outflow of capital from Russia in August and September amounted to $10.8 billion. There was a $50-billion influx, however. Nonetheless, the world banking crisis will make itself felt more and more in Russia.
“Now, our companies and banks are showing demand for Russian rubles in order to maintain lending to the Russian economy or, if the need be, to carry out conversion and settlements with the foreign markets,” Kudrin said. “The Central Bank also has additional reserves for carrying out additional intervention in rubles on the market. This is the Central Bank's main function. The Bank has a constitutional duty to maintain liquidity on the Russian market.”
The Federal Tax Service has been doing its part. “The Federal Tax Service has conducted an inventory of all the applications for return of VAT, and we have taken measures to ensure that all applications from honest taxpayers will be dealt with rapidly, and this will make it possible to increase tax return payments to our companies by an additional 20 billion rubles,” Kudrin recounted. “Furthermore, investment projects carried out under the federal targeted programs and state defense procurement programs are traditionally completed in November and December, and this will support an increase in budget spending over these two months. In this context, we are seeing a perfectly normal increase in the amount of money in banks' correspondent accounts. The interbank lending rate, which is the indicator of liquidity on the market, has dropped to 6 percent over these last days, and this shows that there is enough liquidity today for banks to conduct normal business.”
Medvedev then told the president that the birthrate was at a 15-year high, having risen 8-9 percent, and mortality rate at a ten-year low, having fallen 5-6 percent. Ivanov told the president that he was meeting with the Russian women's basketball team, the champions of Europe.
Andrey Kolesnikov
All the Article in Russian as of Oct. 09, 2007
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