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President of Russia Dmitry Medvedev: Good afternoon. There are a few issues I would like to talk about today. One of them concerns a major project, the Direct Investment Fund, which is sometimes wrongly called a sovereign fund. I think we will discuss this in the near future in the light of the instructions I issued at the last meeting. I hope the work is going well.

The second issue, one that is always relevant, concerns the support for small business, and this is a major responsibility for your bank as a development institution. Please tell me about the latest results of these efforts.

Vnesheconombank Chairman Vladimir DMITRIEV: Let me begin with your first question. We are actively engaged in drafting the regulatory framework and are cooperating with foreign investors on the establishment of the Direct Investment Fund. Only a week has passed since the meeting you chaired but we have already received very positive feedback from major state and private investment funds and sovereign funds, in particular, from the Abu Dhabi Fund, China Investment Corporation and a number of private funds that have welcomed the intention to create the Direct Investment Fund in Russia and expressed their interest in close cooperation on designing and creating this fund. Moreover, foreign investors understand that co-investment is one of the main principles behind the creation and operation of such a fund and they are ready to take part in it.

So the work is continuing. We will shortly submit a plan to you with the objective of making the intention to establish the fund public by June. We believe that the plan is aggressive but it is absolutely realistic.

”Support for small and medium-sized businesses is a top priority. What is most important is that we don’t rest on our laurels but continue our efforts to promote the creation of a middle class in our country.“

Dmitry Medvedev: I have signed an instruction on this issue, as we had agreed during the meeting. The deadlines are tight; as you say, it is an aggressive plan but I hope that it is realistic. So get down to work.

Vladimir Dmitriev: With regard to small and medium-sized businesses and the support provided by our subsidiary, the Russian Bank for Development, I can confirm that the programme is proceeding as planned. The funds for the programme amount to about 130 billion rubles [$4.6 billion], and this money goes directly to regional banks to support small and medium-sized businesses. But, in my opinion, it is important to note that recently, actually since last autumn, we have reformatted the programme in such a way that now the emphasis is on innovation and institutional support, that is support for the agencies other than banks that work with small and medium-sized businesses: this includes guarantee funds, leasing companies and factoring companies. With all this the focus is on innovation and modernisation of small and medium-sized enterprises, the companies that work in these sectors.

It is clear that this is a high-risk sector but on the other hand it requires affordable capital, because they have no collateral – many companies start from scratch. Therefore, we have introduced preferential terms for them. In fact, we are working at zero profit for ourselves and for the Russian Bank for Development, but it helps to keep the interest rates under 10% for the end borrowers.

We exercise tight control over the regional banks that work with small and medium-sized businesses. The average interest rate for small and medium-sized businesses covered by our programme last year was 13%, down from 16% in January 2010. The positive dynamic is obvious.

We plan to introduce the issue of further capitalisation of the Russian Development Bank on the supervisory board’s agenda because the bank operates in line with the Central Bank regulations and, therefore, it needs additional capital to broaden its lending base. At the same time, our support measures include subordinated loans and preferential terms on which we provide funds to the Russian Development Bank. We leave no profit margin for ourselves. In other words, we do everything in our power to make sure that the end borrowers obtain resources at preferential rates.

Dmitry Medvedev: Support for small and medium-sized businesses is a top priority. I am glad that you are tackling this task, that you are working hard and the amount of support provided is significant.

The business community has a basic understanding of the interest rates although of course they want to get loans on better terms. What is most important is that we don’t rest on our laurels but continue our efforts to promote the creation of a middle class in our country.

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