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The 16^th VTB Investment Forum is taking place in Moscow on December 2–3. This year the central theme of the forum is Reaching Higher: Bold Choices for the New Economy.

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President of Russia Vladimir Putin: I would like to bear out what the Minister of Finance has said: we are in favour of competition – I fully agree.

On the whole, regrettably, I will probably have to repeat what has already been said – all the best and most substantive points have already been articulated. Nevertheless, my statement retains its importance, as it confirms the complete consensus that exists in the implementation of our economic policy among the Government, the Presidential Executive Office, and the Central Bank.

The regions of the Russian Federation are not represented here. I can assure you that we work in close contact with the regions, with the business community, and overall, we operate in a sufficiently cohesive and, I believe, effective manner.

First of all, I would like to welcome the participants and guests of the plenary session of the Russia Calling! International Investment Forum. Good afternoon.

As is the good tradition, this event has once again brought together entrepreneurs and investors from dozens of countries for a substantive dialogue on issues pertinent to business and directly influencing the development of trade and investment ties with foreign states.

I am aware that the focus of your attention is on key trends in the global economy and world markets, as well as in Russia’s economy – on the specific tasks we are setting to advance business initiatives in our country, to launch new promising projects, and thereby to expand opportunities for profitable investment across various sectors. I will touch upon these topics briefly in my remarks.

As you know well, the modern world is characterised by high turbulence, largely provoked by the non-competitive practices of certain Western states. Exploiting their monopolistic position in specific markets and in the financial sphere, they impose illegitimate unilateral restrictions, seeking in this way to pressure sovereign states that pursue independent policies. In essence, their aim is to eliminate competitors and to preserve their former privileges in a rapidly changing world – that very slipping monopoly.

In the post-Soviet period, we often stated – and our Western partners at the time were keen to instruct us – that all difficulties should be overcome not through administrative or command methods, but through market mechanisms. Yet the imposition of non-market restrictions is precisely an attempt to preserve those very command methods of managing the global economy. It doesn’t work and it won’t.

Without a doubt, Russia does feel the external pressure, but our country and our economy are successfully tackling these challenges. We will continue to build a sovereign economic policy and to act in the international arena based on our own national interests and needs of the domestic business and our people, to fulfil our obligations to our foreign counterparties, and to advance cooperation with the countries that are interested in interacting with us.

Earlier, I mentioned that countries which act rationally and pragmatically make up the absolute majority. Over the past three years, we have significantly increased our trade with them, primarily our key partners, such as China and India, with which we are bound by many years of friendship and strategic interaction.

There are many representatives of the Chinese and Indian delegations in this audience. I would like to emphasise the fact that we aim to bring cooperation with the People’s Republic of China and the Republic of India to a whole new level and to expand its technology dimension. Numerous joint projects in energy, the manufacturing industry, outer space exploration, agriculture, and other areas are aimed at achieving this goal.

We have established a substantive dialogue on economic matters with President of the People’s Republic of China Xi Jinping. I will also discuss these matters, including expanding Indian imports, in detail with Prime Minister Narendra Modi during the upcoming visit to India. I am sure this import component of our strategy was addressed during this session as well. Considering trade balance-related issues this primarily concerns India

To reiterate, Russia is open to cooperation with foreign businesses in trade, the real sector, and the stock market. Our country offers great opportunities for entrepreneurs and investors, and stable key macroeconomic indicators ensure the safety of such operations.

We maintain a record-low unemployment rate of 2.2 percent. I think I will repeat what has undoubtedly been mentioned here. It was 2.2 percent in September. This figure is low not only for Russia but for most of the world’s largest economies as well.

The public finances remain stable. We made timely decisions regarding both revenue and expenditure of the federal budget. Key priorities, such as social commitments, defence and national security, as well as the objectives to achieve national development goals, have been financed in full.

The budget for the next three years has been drafted to mitigate the impact of external risks and increase the share of non-oil and gas revenues. It remains in line with the budget rules and stipulates a moderate budget deficit. Look at what is happening in some EU countries. We are planning 1.6, 1.3, and 1.2 percent of GDP for the coming years.

What else should be emphasised? Russia’s public debt, as has already been noted, remains below 20 percent of GDP – one of the lowest levels globally. This means that we continue to pursue a balanced, responsible fiscal policy and, together with consistent monetary policy measures, are achieving a slowdown in price dynamics.

In this regard, I want to stress that the decline in inflation has been one of this year’s major accomplishments. While inflation was estimated at double-digit levels in March, it now stands at below seven percent year on year. By the end of December, it is expected to be around six percent, that is, below the forecasts by both the Government and the Central Bank. I know that experts will now begin recalculating the figures using different parameters, but overall, this is the situation as it stands. And we expect this positive trend to continue.

Meanwhile, economic growth is slowing. Over the first nine months of this year, Russia’s GDP grew by one percent, with 0.6 percent in the third quarter. The full-year forecast places GDP growth in the range of 0.5 to one percent. Overall, this is what we expected. From the outset, when the Bank of Russia raised the key rate and the Government adopted its corresponding decisions, we anticipated a “soft landing.”

However, certain imbalances have emerged. In several industries, output this year not only failed to grow but actually declined. Are we satisfied with these trends? No.

Let me remind you that last December, the Government and the Central Bank were tasked with fundamental objectives. These include ensuring a transition to a balanced growth model, maintaining low unemployment and inflation, and simultaneously initiating structural economic changes, taking into account the policy of making our economy more formal and strengthening the competitive environment. We will discuss these matters in detail next week at the meeting of the Council for Strategic Development and National Projects.

First and foremost, we must strive for a more rapid pace of investment growth, increase allocations towards the development of production in the service sector, and launch new projects in industry, agriculture, infrastructure, high technology, tourism, and so forth. Over the past three years, investment has grown at an above-average rate: by 6.7 percent in 2022; 9.8 percent in 2023; and 7.4 percent in 2024. This year, the pace is more modest but remains positive overall.

What is the reason for this? In a number of economic sectors, corporate profits have declined, which is well known, meaning that the companies’ own funds for investment have diminished, whilst the cost of borrowed capital and bank loans – resources that domestic businesses have largely used to finance projects – has objectively risen. These are obvious and understandable factors.

It should be noted that in recent years our financial sector has managed to fundamentally reconfigure its operations – I want to emphasise this point separately – by replacing unreliable external sources of financing with domestic ones. As a result, the external debt of real sector enterprises has almost halved. I will tell you frankly, there was a degree of apprehension initially: would our economy and industry as a whole cope with this transition? They have coped.

Thanks to timely regulatory measures and the accumulated safety margin, the Russian banking sector is now operating confidently and stably. Whereas in 2022 the sector worked with a near-zero financial result, a profit of just 200 billion rubles, in 2023 this figure amounted to 3.2 trillion rubles, and in 2024, to 3.8 trillion roubles. According to the forecast of the Bank of Russia, by the end of 2025, the banking sector will have generated a profit of approximately 3.2 to 3.5 trillion rubles.

I am convinced that it is necessary to enhance the contribution of the banking sector to the development of the national economy, our territories, and residential communities, and to improve the return – the effect for real production – derived from the use of credit resources.

At the same time, it is imperative that bank funds, their profits, and the savings of citizens and companies are channelled towards the realisation of business ideas not only in metropolises and centres of business activity, but across all regions of the Russian Federation. To this end, every constituent entity has already implemented a regional investment standard. Development agencies have also been launched at the regional level. They are engaged in investor support, advising on how to register a land plot, apply for support mechanisms, or resolve infrastructure issues. However, projects, especially large-scale ones, often go beyond the boundaries of any particular region.

Also, in the case of foreign investments, it would be useful to have a federal perspective on where it is most appropriate for foreign partners to implement specific projects and which federal support measures they should use. For such initiatives, I propose establishing a unified investment support ecosystem that would allow entrepreneurs and companies to receive professional advice and assistance throughout the entire project lifecycle, from concept development to full implementation. I propose creating this ecosystem within VEB Corporation, with the participation of the Ministry of Economic Development.

Furthermore, it is essential to strengthen the role of the stock market as a source of investment capital, especially considering the strong interest of both individual and institutional investors in our financial markets.

For example, by mid-year, more than 37 million individual clients were registered on the Moscow Exchange, amounting to nearly half of the country’s economically active population.

Their combined assets exceeded 11 trillion rubles. At the same time, the number of institutional investors receiving brokerage services increased by more than one-third over the year to reach 50,000 with their portfolios exceeding 15 trillion rubles.

Of course, the current economic environment influences the Russian stock market. Its capitalisation has declined slightly and now stands at around 23 percent of GDP.

This year, only three companies have conducted initial public offerings. Among them was DOM.RF Corporation, our leading housing development institution, which entered the stock market. Mr Mutko, I congratulate you on this achievement. I am aware that you and your team conducted extensive work to do this, and it yielded successful results.

Clearly, the Russian stock market has significant room for expansion and new listings. Additional measures are required to increase its capitalisation so that its full potential can be leveraged for the benefit of the entire country. In this regard, I believe I can propose…

First. Investments in bonds and trust units are growing. However, rising debt is not the only instrument for expanding production and launching investment projects. For long-term development, attracting equity capital is essential.

To advance this objective, I ask the Government to develop in the near future a programme for initial and secondary public offerings by companies with public ownership. I also ask the ministries to map out sectoral plans for bringing major issuers to the stock market, providing, of course, specific and effective incentives for businesses that undergo public listing. This includes linking existing support measures to a company’s public status.

To illustrate: a borrower from the Industrial Development Fund, for instance, could become eligible for a reduced loan rate upon conducting an initial public offering, or IPO.

Second. It is necessary to enhance the efficiency and transparency of corporate governance in joint-stock companies so that their shareholders can have confidence in the security of their investments and in receiving a return.

I am aware that the Bank of Russia, together with the Moscow Exchange and with the support of the Ministry of Finance, has launched a shareholder value enhancement programme, drawing on relevant experience from Asian markets.

The programme focuses on the disclosure of key corporate metrics for investors, such as net assets, dividend yield, forward-looking statements, development strategies and so on. Participants in the shareholder value programme will form a pool of companies that will serve as a benchmark for other Russian issuers and as a mark of quality for investors.

I ask the Government to ensure that the largest joint-stock companies with public ownership join this programme by the end of next year, and to align their operational frameworks and management incentive structures with the goal of increasing shareholder value.

Naturally, we must proceed with due care. Ms Nabiullina is nodding her head – she likes it. I like it too. However, under current conditions, we must, of course, assess the actual position of our state-owned companies and fully account for all the challenges they face. Nevertheless, we must advance decisively along this path.

And, finally, third. It is important to further enhance the attractiveness of the capital market, improve investor confidence and provide for cash inflows. An increasing number of our citizens join the long-term savings programme which is an important source of long-term investments. They have already entered into more than eight million such agreements worth almost 560 billion rubles.

A year ago, I issued instructions at our forum to encourage so-called family savings. I can remind you what is all about. If parents open a long-term savings product for their children and invest funds there, then they can get a personal income tax deduction. The tax deduction amount is calculated based on the actual contribution up to 500,000 rubles per parent. So, the maximum amount per family for being eligible to a deduction will make up one million rubles. The relevant amendments have already been made to the legislation.

In addition, employers that co-finance their employees’ savings under the long-term savings programme are entitled to certain benefits. They will become effective starting September 1 next year. So we will see how these novelties can work and how businesses and individuals will evaluate their efficiency. Then, we will either fine-tune these measures or launch additional mechanisms for developing our stock market.

Friends, the feedback and permanent dialogue with the business community and investors is a key condition for improving the business climate and for strengthening investment dynamics as a prerequisite for a robust long-term economic growth. Opinions and proposals from both domestic businesses and our foreign partners, as well as an account of the best foreign practices and the assessment of our own experience, are important for solving the tasks and problems that our business community deems paramount, most important.

It is crucial that the Russia Calling! forum offers an excellent opportunity to hold an open and constructive discussion on all issues. I know that your discussion is very active. I am sure that it is very substantive and useful. I want to thank all of you, especially our foreign friends and colleagues, for being here, for showing interest in working with Russia. I wish you all the best.

Thank you for your attention.