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, Presidential Aide Maxim Oreshkin, Minister of Economic Development Maxim Reshetnikov, Minister of Finance Anton Siluanov, and Central Bank Governor Elvira Nabiullina.
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The President’s opening remarks
President of Russia Vladimir Putin: Colleagues, good afternoon.
Today’s agenda includes a review of the current economic situation in Russia and its main trends. We will discuss what additional measures are needed in the current environment to support Russian businesses, manufacturers, industries and, of course, people.
It is obvious that the pressure from sanctions, yet more pressure from sanctions imposed by Western countries has been the main negative factor for the economy lately. They expected еру sanctions to rapidly produce a devastating effect on Russia’s finances and economy, sow panic in the markets, bring about a collapse in the banking system and create major shortages of goods in shops.
However, we can already say in all confidence that this policy has failed in Russia. The strategy of unleashing an economic blitzkrieg has been ineffective. Moreover, the sanctions affected those who initiated them. I am referring to higher inflation and unemployment and the worsening economic outlook for the United States and European countries, as well as the declining living standards of Europeans and the depreciation of their savings.
As I have already said, Russia has been able to withstand this unprecedented pressure. The situation is getting back to normal with the ruble recovering to where it was in the first half of February, which is attributable to a robust trade surplus, which is an objective reality. In the first quarter, the current account surplus exceeded $58 billion, setting a historical high. Foreign cash is returning to the banking sector and household deposits are growing.
As for the consumer market, retail demand has stabilised after a brief period of panic buying, which does happen in situations like this. Retail chains are restocking their supplies.
Let me note that we were right to refrain from shifting market regulation into a manual, artificial mode. Instead, we gave businesses the liberty to come up with appropriate and effective solutions. These decisions enabled us to keep retail chain supplies flowing and ensure the availability of essential goods in the shops.
I would like to say a few words about the inflation rate. It is stabilising now, but nevertheless you and I know very well that consumer prices have grown considerably in Russia over the past six weeks, by 9.4 percent, which means that yearend inflation as of April 8 was 17.5 percent.
Our colleagues in the Government and the Central Bank should know that we are fully aware of what is happening: the inflation rate is very high. People have felt the impact on their family incomes, they notice how prices have risen, and we must help our citizens deal with this wave of inflation.
In this context, I would like to remind you that a decision has been taken to adjust all social benefits, pensions and wages in the public sector, in accordance with inflation. The parameters of this adjustment are to be prepared by the Government.
Of course, the main condition for a real increase in our citizens’ incomes is the creation of new and well-paid jobs, the acceleration of the economic growth rate, and the development of industry and other sectors.
Overall, the current situation is stable in this regard, as we can see from the electricity production index. This indicator is very good, which points to the dynamic development of the economy. And the number of registered unemployed is relatively low.
We certainly need to constantly monitor the situation in the economy and the employment market and, in general, we need to keep abreast of the developments, as well as take prompt decisions to ensure the stable and confident operation of our businesses and entrepreneurs. Thus far, the Government and the Central Bank have been doing this successfully.
Today I would like to ask our colleagues from the Central Bank and the Government to tell us about their vision for the development of the national economy and the measures we must take to prevent a potentially adverse situation in the economy and setbacks for Russian companies, enterprises and citizens.
Before we move on to the agenda, I would like to mention the issues that I would like to pay particular attention to today.
The first is foreign trade. The restrictions against Russia imposed by unfriendly countries have affected Russian businesses, and, of course, complicated the logistics of exports and imports and created obstacles to making settlements.
It is necessary to provide entrepreneurs with as much assistance as possible in dealing with these issues, including speeding up the transition of foreign trade to rubles and the national currencies of countries that are Russia’s reliable business partners. I want to emphasise that in the new, changed environment, we need to do this much faster. I would like you to report today on how this work is being organised and what results you plan to achieve.
Second, it is crucially important to support domestic demand and prevent it from shrinking. It is necessary to act both through the budgetary system and to provide businesses with greater access to loans. This is the responsibility of the Central Bank. The bank has already begun lowering the interest rate, which will reduce the future cost of loans in the economy.
As for the budget, I know about the discussions between the Central Bank and the Government, taking place amid a fall in lending; nevertheless, the budget definitely should actively support the economy, fill it with financial resources, maintain its liquidity. We have the capacity for that. Of course, one needs to act with caution; the Minister and I constantly discuss this.
Nevertheless, in the first quarter of this year we are witnessing a record level of budget surplus. We require additional solutions here, and they have to be implemented when the economy needs them the most. It is necessary to be cautious, and as I see it, the key condition is that the financial system remains stable at the federal and regional levels. What is our current surplus? I believe it is some 1.1 trillion rubles, and the total surplus in the regions is about 0.9 trillion rubles.
So, I suggest we discuss the budget policy in detail today.
Let us begin. Ms Nabiullina, please, you have the floor.