Russian Federation

Putin puts infrastructure and flood relief at the heart of the federal budget


Published

President Vladimir Putin held a budget meeting with his key ministers and advisors on Wednesday during which he outlined the important areas for the 2014 – 2016 budget. The president focused on the budget being a development budget with the flooding in the Far East being an important area for more funds. He also singled out infrastructure and regional budgets for extra spend.

On infrastructure the president said that the time for action had come on developing the Trans-Siberian and Baikal-Amur Railways in the country’s east, the Central Ring Road in the central region, and build high-speed rail lines.

The full press release as published on the presidential website is as follows:

“Meeting on draft federal budget for 2014–2016

September 11, 2013, 16:15 Novo-Ogaryovo, Moscow Region

Vladimir Putin held a meeting on the draft federal budget for 2014–2016 to examine the key areas for forming the budget and extra-budgetary funds over the upcoming period.

Participants in the meeting included Prime Minister Dmitry Medvedev, Chief of Staff of the Presidential Executive Office Sergei Ivanov, First Deputy Prime Minister Igor Shuvalov, Deputy Prime Ministers Olga Golodets, Dmitry Kozak and Dmitry Rogozin, the finance, economic development and defence ministers, and Chairwoman of the Central Bank Elvira Nabiullina.

* * *

PRESIDENT OF RUSSIA VLADIMIR PUTIN: Good afternoon, colleagues.

Today, we will discuss the draft federal budget. I know the Government has already done a lot of work, a lot of complicated and responsible work that was not easy to say the least in terms of the constant debate on priorities, what is most important and what can be left until later.

Ultimately though, it is all of this debate that finally produces the truth. Let’s not forget that this draft budget will then go to the State Duma, and then the real debate will begin. This debate is sometimes politicised, but every democratic country needs it in order to set priorities.

As for what is new in the routine work on the budget, first, this is the first time that the budget has been drafted based on a programme principle. Second, the global economy has entered a period of change once again, and this will affect our country in one way or another.

Fortunately, this is a not a crisis situation yet, and let’s hope that it will not develop into a crisis. We are seeing some signs of stabilisation on leading markets in North America, Asia and Europe. Ultimately, this will have an impact on us too, as a part of the global economy.

Nevertheless, we need to make a sober assessment of the situation and adjust our revenues and expenditure in accordance with the economic growth forecasts as they take shape at the given moment. There is no alternative course of action here.

At the same time, the budget that the Government is currently drafting must be a development budget. This is very important indeed. The whole specificity of our work now is that we need to be cautious and bear in mind the current circumstances, while at the same time not forgetting our long-term economic development goals.

There are a few points I want us to focus particular attention on today.

First, we must organise financing for the relief effort following the flooding in the Far East. Many of you have gone out there, and not just once, have seen the flood-hit regions and know the disaster’s scale and how serious the situation is.

We already have an idea of how much extra funding it will take to settle all of the problems, rebuild infrastructure and help people. This is extremely important work and it must be carried out without delay.

Second, I want to hear from you today on how the draft budget reflects the provisions set out in the Presidential Budget Address, above all those on funding for carrying out the presidential executive orders of May 2012. I won’t go into the details right now. You all know what I am talking about.

Third, we have held a whole series of meetings this year on carrying out big infrastructure projects. We came to what I think is the timely, justified and correct conclusion that we do need to develop our country’s infrastructure, because it is absolutely obvious that we have great many problems in this area.

We have built up resources that we can draw on at the expert and administrative levels. We all agree that we have the resources we need to be able to develop the Trans-Siberian and Baikal-Amur Railways in the country’s east, the Central Ring Road in the central region, and build high-speed rail lines, and not only think and talk about these projects, but actually start carrying them out. In short, we must not forget about these long-term infrastructure projects that are so vital for our economy’s future in general.

Fourth, in examining the federal budget’s aims, we need to look at the regional budgets too. I ask you to pay utmost attention to this aspect of our work because the regions are under quite a lot of pressure at the moment: they carry a big share of the burden of implementing the May 2012 executive orders. There has also been a decrease in revenues from some of the taxes that go into the regional budgets. These are all things that need to be taken into account in the relations between the budgets at the different levels.

Pension reform is another very important issue that I propose we discuss in more detail today.

Let’s start work.”

More detailed briefing on the politics and risk of doing business in this country is available to clients and subscribers. If you would like to know more then please contact enquiries@tradebridgeconsultants.com