Moscow Times
November 10, 2008
Putin Sets Sights on The Real Economy
By Anatoly Medetsky / Staff Writer
Prime Minister Vladimir Putin has signed off on a program to help the Russian economy battle the global financial crisis as part of a promised shift of focus from the banking sector and stock exchanges to the country's real economic sector.
The plan, published Friday, includes placing Central Bank representatives within the management of the country's biggest banks to ensure that state money reaches its intended targets and will see state-controlled corporations investing more rigorously in the economy.
Putin said during a meeting Friday with senior members of the United Russia party that he heads, that he had signed off on the plan the day before.
"I am confident that the faster we set into motion new factors for economic development and growth, the more confidently we will pass through the period of global instability," Putin said.
United Russia will be called on to pass the necessary laws for a number of the measures a mere formality given the pro-Kremlin party's overwhelming majority in the State Duma and will also play a key role in promoting the ideas with the public, Putin said.
One of the 55 measures laid out in the anti-crisis plan is the drafting of a law later this month that would enable the Central Bank to assign representatives to the management of banks that receive state support.
These officials would make sure that the banks lend money to four priority sectors: airlines, real estate development and automobile and farm equipment manufacturing.
State corporations and state-controlled "natural monopolies" like Gazprom have until the new year to increase the tempo of their investment plans in order to maintain domestic demand.
The plan only calls for the final forms of some of the other measures to be completed by the end of March, including an order calling on the Finance and the Health and Social Development ministries to draft legislation to raisethe level of monthly unemployment benefits.
The Transport, Energy and Finance ministries have been given the same March deadline by which to formulate proposals for the floating of government-backed "infrastructure" bonds to finance the construction of roads and electricity facilities.
Yelena Matrosova, macroeconomic research director at the consulting firm BDO Unicon, praised the call on state corporations to drive domestic demand.
"Who else has money?" Matrosova said. "Only them."
If these corporations move their enormous investment projects ahead, this will boost slackening demand for metals, energy and equipment, creating jobs for people currently being laid off, she said.
The government-backed bonds, meanwhile, would lure back some of the portfolio investors that have fled the uncertainty of the country's stock markets, Matrosova said.
She also cautioned that trying to pursue a broad wish list would be ineffective, saying that the government should instead single out a couple of projects to receive the new financing.
On a global scale, Russia teamed up with Brazil, China and India on Friday to call for a greater say for emerging economies in the way international financial bodies like the World Bank and the International Monetary Fund are run.
Finance Minister Alexei Kudrin and his counterparts from the three other so-called BRIC countries, released a joint statement saying these institutions had to reflect the "increasingly central role that emerging markets now play."
They also agreed to help each other in countering the crisis by increasing trade and mutual investment, Kudrin said.
"This position would strengthen the stability of our countries," he said, RIA-Novosti reported.
Brazil, Russia, India and China are members of the G20, a group of countries whose leaders will convene in Washington on Saturday to discuss the global financial crisis. In Sao Paolo, Kudrin and his counterparts exchanged ideas for changing the global financial architecture ahead of the Washington meeting.