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Vladimir Putin’s annual news conference
The President’s news conference was broadcast live by Rossiya 1, Rossiya 24, Channel One and NTV, as well as Mayak, Vesti FM and Radio Rossii radio stations.
Television channel Public Television of Russia (OTR) and its site (http://www.otr-online.ru/online/) provided live sign language interpretation of the news conference.
The host broadcaster of the event is the National State Television and Radio Broadcasting Company (VGTRK).
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President of Russia Vladimir Putin: Good afternoon, colleagues, friends.
Let us begin our traditional end-of-year meeting that we call a news conference.
As always, I will spend just a few brief seconds to sum up the results of the outgoing year. A lot has been said already, but I have the latest data reflecting the most recent results, some just a couple of days old.
Before the beginning of Vladimir Putin’s annual news conference.
In the first nine months of 2018, GDP increased by 1.7 percent, while the Economic Development Ministry expects the annual increase to total 1.8 percent. Industrial output was growing at a faster pace, totalling 2.9 percent in the first ten months of 2018, with the annual results expected at 3 percent, up from a 2.1 percent growth in 2017. In addition, processing industries have been growing at a somewhat faster pace of 3.2 percent.
In the first three quarters fixed capital investment increased by 4.1 percent. Cargo shipments and retail trade are on the rise, having increased by 2.6 percent. Consumer demand growth has been apparent. This is a positive factor. After a lengthy interval, the population’s real income has shown some, albeit very moderate, growth. According to the latest statistics, real incomes will increase by 0.5 percent. I hope that this momentum will be maintained, since real pay levels are on the rise, having grown by 7.4 percent in the first nine months, which is expected to give us 6.9 or 7 percent by the end of the year.
Inflation remains at an acceptable level, although it has increased a little in the past week, by 0.5 percent, I think. Therefore, we will be able to reach the Central Bank’s reference rate of 4 percent and will have an inflation rate of 4.1 percent to 4.2 percent – somewhere just over 4 percent.
The unemployment rate is going down, which is good news. If last year it hit a historical low of 5.2 percent, this year it will be even lower – 4.8 percent.
The trade balance surplus is growing. In 2017, if you remember, it was around $115 billion. Over the three quarters of this year we already achieved $157 million. As of the end of the year, we expect it to reach $190 billion.
Our finances are growing stronger. Our gold and foreign currency reserves have grown by over 7 percent. In the early 2018, they amounted to $432 billion while now they stand at almost $464 billion.
For the first time since 2011, we will have a budget surplus. We are about to reach the federal budget surplus of 2.1 percent of the GDP. The National Welfare Fund has grown by around 22 percent.
The average annual insurance component of the retirement pension stood at 13,677 rubles in 2017. By the end of this year, it will be 14,163 rubles.
Life expectancy has also increased slightly compared to 2017, from 72.7 to 72.9 years.
These are the general results that I wanted to mention in the beginning. Let’s not waste our time and proceed to your questions and my attempts to answer them.
Presidential Press Secretary Dmitry Peskov: Let us begin by giving some priority to the Kremlin pool. Its members worked with us throughout the year, following the President both in Russia and abroad.
ITAR-TASS, the state news agency.
Veronika Romanenkova: Thank you.
The year 2018 arguably went by under the sign of new national projects that you launched with the May Executive Order. They are expected to cost an enormous amount of money. However, some experts, members of the State Council, as was mentioned in Yalta only recently, have questioned the feasibility of these national projects and whether they are needed. How well thought out are the performance assessment criteria for the national projects? For example, the Accounts Chamber Chairman said that there is no way to assess their effectiveness. What can you say to counter this?
Before the beginning of Vladimir Putin’s annual news conference.
Vladimir Putin: I will have to begin by saying a few words on whether these projects are needed, since you said that some question this.
I have said it on numerous occasions, and I will repeat it today. We need a breakthrough. We need to transition to a new technological paradigm. Without it, the country has no future. This is a matter of principle, and we have to be clear on this.
How can this be done? We need to focus the available resources, find and channel them to the essential development initiatives. How can these efforts be organised? By simply distributing money, and that’s it?
First, we had to find this money. It took us the entire year 2017 to articulate the objectives and find the resources. Both the Government and the Presidential Executive Office contributed to this effort. By the way, when some call for more changes within the Cabinet, we have to understand that it was the Government’s financial and economic block that developed the national development programme to 2024. For this reason, they are the ones who must take responsibility for the plans they made. There is no way around it.
So how should this effort be organised? By simply distributing money? After all, as much as 20.8 trillion rubles are expected to go into the national projects alone, and another 6.5 trillion will be invested in a separate infrastructure development plan. Of course, the allocation of these resources has to be set forth in documents of some kind on achieving breakthroughs. You can refer to these development plans any way you wish. We call them national projects. After all, it makes it clear that there are goals that have to be achieved. If there are no objectives, you will never achieve the final outcome, no matter how you manage these investments. It is for this reason that the 12 national projects were developed alongside an infrastructure development plan. Let me remind you of the main vectors.
Healthcare, education, research and human capital come first, since without them there is no way a breakthrough can be achieved. The second vector deals with manufacturing and the economy. Of course, everything is related to the economy, including the first part. But the second part is directly linked to the economy, since it deals with the digital economy, robotics, etc. I have already mentioned infrastructure.
Why did we have this meeting in Yalta, Crimea, to discuss with our colleagues from the Government and the regions how we will proceed in these efforts? Because there are questions on how to assess performance under these projects. We need effective controls, while making sure that all efforts by the federal centre to monitor what is happening in the regions are effective. It is true that there are challenges in this regard, but we are working on them. So what is the tricky part? The tricky part is that funding mostly comes from the federal centre, and this applies to all programmes, while most of the efforts are undertaken in the regions. The regions must be ready to work constructively. Instead of simply hiking up prices in response to an increase in the available funds, they must focus on achieving concrete results that will be clearly visible. This is the first point I wanted to make.
Second, we need to understand whether they will be able to succeed. This is a real question. Some argue that this would be impossible. But this is what we hear from those who must deliver. Instead of having these thoughts they need to work on delivering on these objectives, and if they feel that they are unable to do so, they have to clear the way for those who are positive about their ability to deliver and are ready to work. To tell you the truth, I have not seen anyone who did not want to do it or said that it was impossible. These messages come from outside observers.
Without ambitious goals we will never achieve anything. For this reason, I do hope that the federal centre and the regions will be able to work together in a consolidated and positive manner. Yes, some indicators have to be adjusted. Our colleagues from the regions have submitted their proposals to this effect, and I have high hopes that the Government will take them into consideration and adjust specific indicators so that we can move forward effectively…
Before the beginning of Vladimir Putin’s annual news conference.
Pavel Zarubin: Rossiya TV channel.
I would like to expand on a topic that has already been raised. Many economics experts, including Alexei Kudrin, assert that in reality, the Russian economy has been growing just by one percent on average over the past ten years, and if so, this is essentially marking time, or stagnation. You set the goal of making a breakthrough, a leap, but for this, even if we take the lowest estimate, the growth rate should be at least four to five times higher. The Government promises to achieve the goal, but that same Government acknowledges that in the next few years, GDP growth rates will not exceed even 2 percent. In this regard, here are my questions: what does the Government rely on in its forecasts, in the planning of its work? Is a breakthrough possible at all, in this context, or will the economy continue operating like this: we make some money on oil surplus, put it aside, then spend it when there is a need for it? In general, are you satisfied with the Medvedev team?
Dmitry Peskov: Friends, I would ask you please to respect each other – ask only one question each.
Vladimir Putin: Look, economic growth has been one percent per year for a certain period of time. But, first of all, it was while Mr Kudrin was Deputy Prime Minister, so you must not blame the mirror for showing a crooked face, as they say. This is the first point.
The second is, one should not just count mechanically. I have great respect for Mr Kudrin, he is my friend and a good professional, and as a rule, I listen to his recommendations. He is a reliable specialist, a good one. But look, from 2008 to 2018, the economy grew by about 7.4 percent. In simple maths – yes, it equals one percent, a little more. However, let us not forget how the economy developed. There were higher growth rates, alternating with recessions associated with the global crisis. In 2009, after the crisis in the global economy, not in ours – Russia was not the cause of the global financial crisis of 2008–2009, it came to us from the outside – the decline was about 7.8 percent. Then little by little, we were crawling out of it for many years.
Then, in 2014–2015, another meltdown occurred – a collapse in the oil prices, our main exports. That is why I am saying we should not simply count mechanically.
However, of course, the country’s GDP, the GDP growth rate is one of the main indicators. But we will not be able to achieve the GDP growth rates necessary for this breakthrough unless the structure of the economy is changed. This is what the national projects are aimed at, and why such enormous funds will be invested, which I have already said – to change the structure and build an innovation-based economy. The Government is counting on this, because if this happens, and we should all work towards this, then the growth rates will increase and there will be other opportunities for development.
By the way, you mentioned the projected 2 percent growth for the next two years. Yes, in the next years, 2019–2020, two percent each, but from 2021, the Government is already planning 3 percent, and then more. Therefore, I strongly hope that we will manage to do all this. Some fluctuations are probably possible, but, I repeat, the most important thing is that we need… Do you see what we need to do? We need to join another league of economies, and not only in terms of volumes. I think that taking the fifth place in terms of volume is quite possible. We used to rank fifth in terms of the economy, in purchasing power parity, and we will do it again, I think. However, we need to ascend to another league in terms of the quality of the economy. This is what our national projects are aimed at.
Pavel Zarubin: Are you satisfied with the Medvedev team?
Vladimir Putin: Overall, yes.
Question: Good afternoon.
Mr President, in my city of Volgograd we had a wonderful year. We celebrated the 75th anniversary of the Battle of Stalingrad. You made it a federal holiday and we really appreciate it. You also paid us a visit.
Vladimir Putin’s annual news conference.
We successfully hosted the World Cup and our region indeed began to breathe and develop.
There is a lot that still needs to be done. I think the economy will be extensively discussed. But Volgograd residents have a big wish and a great favour to ask. In 1998, the Kacha Higher Military Aviation School of Pilots, which had a very long history, was shut down.
It was established at the Tsar’s decree in 1910 and we were truly proud of it and want to be proud of it further. We want the military traditions to live on. Please consider re-opening it.
Vladimir Putin: In which year was it shut down?
Remark: In 1998, unfortunately. It had the Order of the Red Banner and a long history.
Vladimir Putin: You see, it is already 2018. It happened 20 years ago and I do not quite know what is left of this legendary school.
You are right, it was indeed a legendary school. But the Russian Defence Ministry plans personnel training resources based on whether there is a demand for specific types of personnel in the Armed Forces.
Therefore, we need to look at what can be done not only to remember it but perhaps to preserve the remaining traditions. I will make sure to look into this and consult with the Defence Ministry.
Maria Balyuk: Mr President, good afternoon. My name is Maria Balyuk, I represent the Prime news agency.
Mr President, the budget in the current year and the next year will have a surplus. However, starting January 1, a number of decisions are coming into effect that may cause a significant increase in prices of a wide range of goods and services.
For example, the VAT will increase to 20 percent, which has already triggered a two-stage increase in the housing and utilities rates next year. There is also the new tax for self-employed persons in pilot regions. Please tell us how these measures agree with the state’s economic policy.
Vladimir Putin: Housing and utilities rates in two stages, and what else?
Maria Balyuk: And, for example, a tax on self-employed people in pilot regions.
Isn’t this amount of new measures too much of a burden on Russians and the economy?
Vladimir Putin: You said about the surplus.
Yes, this is indeed a good indicator of the Government’s economic block performance. As I said in my opening remarks, for the first time since 2011 we will have a budget surplus of 2.1 percent. And this is good.
Let us not forget that as an oil producing country and a country that derives much of its revenue from selling oil and gas, we also have what is called a non-oil-and-gas deficit. This is what the country earns from selling products and services other than oil and gas.
Let me remind you that this non-oil-and-gas deficit was 13 percent in 2009, which is a lot. In the early 2000s, it was at about 3 percent, but the global economic crisis forced us to use our oil revenues to meet our social commitments and finance the Armed Forces, so we had to tap into the oil revenues.
Vladimir Putin’s annual news conference before the beginning of Vladimir Putin’s annual news conference.
In this situation, the non-oil-and-gas deficit surged into the double digits almost reaching13 percent, I believe. This was a very serious challenge for the Russian economy. We have now reduced it to 6.6 percent, and next year it is expected to decline to 6 percent and remain at this level for the next few years.
This is a very important indicator of economic resilience for the Russian Federation. Therefore, the increase in the VAT rate, among other things, is due to the need to maintain the non-oil-and-gas deficit at a certain level.
Second, in many countries VAT is 20 percent or even higher. It used to be higher in Russia as well, but we reduced it at a certain point. Now we have returned to a 20-percent tax rate.
However, the effective VAT rate for the overall economy will be below 20 percent since almost all benefits remain in place: for pharmaceuticals, children’s goods, and so on, including for IT companies. Many benefits have been preserved. With this in mind, the effective rate will be actually lower.
Finally, I do hope that the rate hike will be only a one-off measure with a possible slight increase in prices and inflation in the beginning of the year, after which the inflation will go down.
The Central Bank also seeks to prevent inflation from picking up. Only recently, the interest rate was increased by 0.25 percentage points.
While there are definitely both benefits and disadvantages to this decision, all this is done in order to prevent inflation and prices from growing. For this reason, I believe that the overall decision was correct and balanced, creating additional budget revenue and the possibility to deliver on our development plans as part of the national projects.
As for increases in housing and utilities tariffs, over the past years they grew by about 4 percent per year. It is true that next year there will be two hikes: the first one will be at about 1.7 percent, and the second one I think will be about 2.4 percent, but in total this still makes up 4.1 percent.
Why will the increase be spread out in two stages? The reason is that with a higher VAT, prices of some goods and services are expected to increase, and we need to make sure that the utilities sector does not come under stress.
For this reason, in order to shield companies in this sector from these developments and ultimately in the interests of the people, we decided to proceed in two stages. That said, the overall increase should not exceed 4.1 percent.
In some regions, where the utilities infrastructure requires major upgrades and bigger hikes are required, this can be done as an exception, and subject to federal Government approval.
Yekaterina Gagarina: Good afternoon, Mr President. My name is Yekaterina Gagarina. I represent the Rossiya TV channel in Novosibirsk.
The importance of the Akademgorodok 2.0 [Academic Town] project that you supported during your visit to Novosibirsk is obvious not only to Siberian scientists. This project is unique for the entire country.
But behind the technological component of this project there are a number of tasks of a similarly large scale. They include building housing, roads, kindergartens and schools. My question is what if our scientific ambitions crash at daily living problems? Will the scientists have somewhere to live?
Vladimir Putin: I would not want them to crash.
I understand that it is a very important part of the entire process. Of course, we will be working on this with the regional officials. When I visited Novosibirsk, I also spoke about this with my colleagues.
The first objective of the federal government is to honour its obligations related to the facilities which trigger the development of Akademgorodok – which, by the way, is the opportunity to earn money on these high technologies. The social component will definitely be carried out after this.
But if any additional action is required to resolve the scientists’ social issues, of course, we will try to do it. By the way, the mortgage sector has been growing lately. We will support it as well. It is growing very fast for everybody. The growth of the mortgage sector stands at over 20 per cent.
Vladimir Putin’s annual news conference before the beginning of Vladimir Putin’s annual news conference.
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Original source: https://t.me/BRICSTether/207