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The 15^th VTB Russia Calling! Investment Forum is being held in Moscow on December 4–5, 2024. Its main theme is The Future of Capital and the Capital of the Future.

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President of Russia Vladimir Putin: Good afternoon, ladies and gentlemen, colleagues,

I am delighted to welcome the heads of leading Russian and foreign companies, investors and experts to Moscow. The Russia Calling! forum has once again brought together representatives of business communities from dozens of countries to help them make new contacts, map out promising projects, and of course, discuss the key trends in the global markets and the Russian economy.

I would like to begin with the situation in Russia.

As you are aware, our entrepreneurs, companies and entire industries faced serious challenges in 2022 as a result of actions taken by, let me put it mildly, some countries or more precisely, their leading elites. These countries have shown themselves to be unreliable partners. Many industrial and logistics chains, as well as cooperative ties that took decades to develop, have been endangered or even disrupted.

We often hear people from the political, military, or economic fields say that these countries set the task of inflicting a strategic defeat on Russia, including in the economy and technology, to drastically weaken our country’s manufacturing industry, finance and services, to create an insurmountable shortage of goods on our market, to destabilise the labour market, and to lower the living standards of our citizens. It is obvious that these plans have failed to materialise. Following a challenging period, the Russian economy has not only fully recovered, but is also living through qualitative structural changes, which is vitally important and, perhaps, is the most important outcome of our work in the economy over the past two to three years.

Russia’s technological, production and logistics potential is making strides. Ties with promising partners are getting stronger.

Last year, Russia’s gross domestic product grew by 3.6 percent, which is a well-known fact, and increased by 4.1 percent in January-October of this year. The growth mainly comes from the manufacturing industries and sectors with high added value. Thus, in a matter of ten months, our manufacturing industry has grown by more than eight percent, 8.1 percent to be precise. The automotive sector and mechanical engineering are growing faster than other sectors. The inflow of specialists to the high-tech sector with high added value and skilled jobs is increasing as well. In September, the number of the IT employees grew by 8.1 percent year-on-year, and by almost four percent – 3.9 percent – in the manufacturing industry.

Fall in unemployment in the regions where it was traditionally high and growing employment rates among young people under 25 is indicative of the structural changes in the labour market. We are aware, though, that youth unemployment is a problem in many countries around the world. We have it, too, or, rather, used to have it. The youth unemployment rate is below nine percent, although at some point, and even recently, it ran as high as 20–25 percent in some regions of the country. Overall, Russia has a record-low unemployment rate of just 2.3 percent. Compared to the majority of the world’s leading and developing economies, this figure is minimal.

For example, in many European nations, it stands at seven percent or higher, whereas in our country, I reiterate, it is slightly above two percent. As a comparison, to back up my statement: it is 7.6 percent in Italy, 7.3 percent in France, a little less in Canada – 5.4 percent, 11 percent in Greece, eight percent in Brazil, and 7.6 percent in Sweden.

The economic upswing has a positive effect on the budget system. From January to October this year, the country’s consolidated budget surplus, inclusive of extrabudgetary funds, amounted to approximately 2.5 trillion roubles. Meanwhile, spending – I want to emphasise this, and I believe that people present here understand what I am talking about – amounted to less than 35 percent of GDP, on a par with the 2021 levels. This evidences that both the Government and the Central Bank are pursuing a well-balanced strategy indeed. It means that, given the objectively increased spending on certain budgeted items, we are generally not padding public spending but working instead on enhancing its efficiency and following a responsible approach to budget management.

Our goal is to hold firm to the trajectory of long-term sustainable economic development, ensuring quality investment dynamics in the real economy by upgrading industrial facilities and boosting labour productivity. This is, clearly, the overall strategy of our development.

At the same time, obviously, it is imperative to avoid any misalignment in key macroeconomic indicators and prevent sectoral imbalances, which undeniably includes the necessity of controlling inflation. So far, as you are aware, it remains at a relatively high level, including when compared to the countries I’ve already mentioned. Our rate stands at 8.8 percent year-on-year. To achieve positive results here, coordinated joint efforts by the Government and the Bank of Russia are required. I would like to stress that this is not just a recommendation or a proposal – this is a guide to action, as I see it. Actually, our colleagues from the Central Bank and the Government understand this perfectly well, and coordination is in place.

It is crucial to correctly and wisely use all economic policy instruments in the fight against inflation, avoid any structural misalignments, including potential risks of increasing income disparity among citizens and reducing the revenue base of Russia's regions.

As I have already mentioned, the primary, fundamental response to the inflation challenge would be, undoubtedly, to increase supply of goods and services on the market so that their volume meets the domestic demand, both from citizens and businesses that are planning to upgrade and expand their production, expand their capacities, invest in construction, in purchasing equipment and implementing development projects.

In this regard, I would like to ask the Government to more clearly set the priorities concerning support measures for industries from the federal budget, and to continue fine-tuning the legal framework and removing excessive administrative barriers for businesses.

All these mechanisms must primarily work to expand production, open new production facilities, and strengthen Russia’s technological sovereignty. Yes, we must remember that we are operating under the objective conditions of inflation containment, adopting tough approaches to our budgetary policy, and we must adjust our credit policy accordingly.

I would like to note that since August, the retail lending portfolio has essentially stopped growing. At the same time, corporate lending continues to grow. I think there is no need to explain to this audience that in general, this is the result we have been aiming for, including when it comes to containing inflation. Corporate loans are still growing, which means that companies are implementing their investment plans, and in retail lending, of course, there has been a certain decline. And it was exactly the goal the financial and economic authorities have been trying to achieve.

I would like to ask my colleagues to closely monitor the dynamics and to work on preventing sharp fluctuations or decrease in the banking system’s loan portfolio, and also to ensure such portfolio structure, including loan terms, industries and sectors of the economy that are raising loans, that contributes to solving strategic tasks and achieving national development goals.

It is also important to pay attention to debt-laden companies with public ownership. We have been discussing this with the colleagues lately. The debt burden has significantly increased recently. Of course, we need to take into account the large-scale investment programmes of state corporations, as well as the social functions they perform. I will not go into details here. My Russian colleagues understand perfectly well what I am talking about.

I have already instructed the Government and the Bank of Russia to make a decision on managing loan portfolios of partially government-owned companies, so as to prevent an excessive debt burden and imbalance in the corporate lending market to the detriment of other industries and companies.

Please keep in mind that for many small and medium-sized companies, which are playing an increasingly prominent role in the economy, the availability of borrowed funds is crucial for investment. We have set a very specific goal – by 2030, we need to see investment in Russia rise 60 percent, in real terms, against the 2020 level.

Despite current challenges, Russian businesses continue to invest in fixed assets. Their investments continue to grow for the third year in a row despite all the problems we are facing or those that outside players have been trying to create for us.

I will cite a few figures. In 2022, investment grew by 6.7 percent; in 2023, the growth was 9.8 percent, and a similar pace was maintained in January-September 2024, up 8.6 percent.

To support businesses’ motivation to invest in development, to expand production capacities and create jobs, we will certainly continue to strengthen the capital market and help companies list their shares on stock exchange. By the end of the decade, the Russian stock market capitalisation should approximately double, reaching two-thirds of GDP.

I would like to note that this year alone, Russian companies completed 19 initial and secondary public offerings of their shares and were able to raise 102 billion rubles.

This is a good result indeed, but still insufficient on a national scale. To reiterate, the Russian capital market should be more actively involved in funding development projects and structural changes in our economy.

The Government and the Central Bank need to prepare a package of additional incentives for issuers of shares to make initial stock market listing a more attractive step. Among other things, it is necessary to stimulate the demand for securities, ensure effective protection of investors’ rights and companies’ information transparency.

In this connection, I would like to remind you that relevant instructions have already been issued in this regard, and we need to step up this work.

Colleagues, there is another matter I would like to point out.

Most of the entities entering stock market are small companies, while many large businesses, industry leaders, are not yet listed. This means that measures to support issuers should both take into account the needs of small businesses, promising startups, and encourage large businesses to place their shares.

For example, state subsidies or preferential loans for large businesses could be made conditional on their stock listing. This seems quite fair. Of course, we also invite investors from friendly countries to our stock market. As I have said more than once, Russia is part of the global economy, and we welcome reciprocal capital flows.

At the same time, we are making an emphasis on domestic sources of funding, so that our people and retail investors have an opportunity to invest their resources and earn money inside the country. These investments and their profitability would be no less attractive than opening bank deposits. Today, according to experts, over 32 million Russian citizens are interested in buying securities. The total volume of their assets exceeds nine trillion rubles.

In the last few years, important decisions have been made to ensure the influx of long-term money into the market and expand the range of relevant instruments. This year, a programme was launched to support voluntary long-term savings. Relevant contributions are insured and co-financed by the state, and a tax deduction can be obtained for the funds contributed. As of November 22, over 2.1 million depositors joined the long-term savings programme bringing in 145 billion rubles.

Let me remind you, that we have a more ambitious goal set in this respect: in 2026, the total amount of funds raised under the programme has to exceed one percent of GDP, that is constitute at least 2.3 trillion rubles, and to steadily grow onward.

I will add that type 3 individual investment accounts were introduced this year to accumulate citizens’ funds. They can be used for long-term investment and to conduct transactions on stock market while receiving tax benefits.

I suggest expanding the functionality of this instrument for the investor to be able to choose an account for dividends on shares registered on their individual investment accounts, that is, to use the income received as they see fit and, importantly, at any time. Of course, a regulatory instrument like this will increase potential investors’ interest in this work, in this case, together with the state.

I would also like to note that co-financing of life insurance will be launched on January 1, 2025. In fact, it is a combination of conventional insurance and investment, where a citizen simultaneously invests funds in assets, in shares, receives return on them, and at the same time insures their life and health. As we agreed, it is necessary to guarantee the return of these funds and provide for the amount of 2.8 million rubles to be guaranteed by the state.

In addition, tax incentives should be offered, primarily tax deductions on the amounts contributed. I would like to ask to draft relevant federal laws and adopt them in the near future.

Let me also add that there is a proposal to create a financial mechanism that would become a family savings instrument, allowing all working family members to receive a tax deduction. Accordingly, the amount of funds eligible for such a deduction should increase to at least one million rubles per year. I ask the Government and the Bank of Russia to determine the parameters for this family support mechanism and implement these decisions.

Colleagues,

The Russian banking system and stock market are developing dynamically on the basis of modern technologies. Approximately three-quarters of our adult population now use cellphones and the internet to transfer funds from their bank accounts and access various financial services. More than 80 percent of payments for goods and services within our economy are conducted via bank transfers.

At the same time, the Bank of Russia is gradually introducing the digital ruble. As part of a pilot programme, replenishing funds and making digital ruble transfers between individuals and legal entities have been tested. This project already involves over 9,000 citizens and 1,200 companies, with numbers continuing to rise. As agreed, from next year, digital ruble settlements will be mandated for use within the federal budget system, and by July 1, 2025, it will be available nationwide.

Here I would like to say a few words about the use of the ruble in international settlements. We continue to develop the necessary infrastructure to facilitate these transactions, making them more efficient for businesses and reducing related costs. Among other measures, we plan to introduce an experimental legal regime that will enable banks to fine-tune methods for remote client identification, while of course ensuring full compliance with anti-money laundering regulations.

Furthermore, we will adopt a flexible approach to tax registration of non-residents, following a model already successfully employed by our banks when opening accounts for such companies. I ask the Government to speed up the drafting of the necessary documents and call on the State Duma to ensure their swift adoption in the coming months.

It is worth noting that the level of digitalisation in Russia's financial services sector exceeds the global average, a testament to the high technological capability of this sphere of our economy. This confirms that Russia’s financial sector is forward-looking, capable of setting ambitious goals, and proactive in its approach.

Experts forecast that the introduction of national digital infrastructure in the financial sector will be one of the key long-term drivers of global economic growth. While some jurisdictions, such as the European Union, Australia, and Singapore, are still in the process of developing certain elements of this infrastructure, Russia has already successfully implemented all of its components, which are operating efficiently. This is not only a significant achievement for our developers and specialists, but also a substantial competitive advantage of our economy, providing a powerful lever for its development in the global context.

Russia’s leadership in financial technologies positions us well to forge flexible partnerships with foreign counterparts, promote integration projects, and leverage the complementary strengths of our respective economies. I am also referring to the investment platform we are developing with our BRICS partners. This work is in its early stages but all the parties involved agree on its potential benefits and good prospects. It is expected to become an important instrument for supporting our economies and providing financial resources to the countries of the Global South and East.

The rapid development of information technologies, which Russia is currently demonstrating, alongside our advanced solutions in the financial sector, will significantly contribute to the growth of this platform and play a key role in its success, which – I have no doubt – will be achieved. This success is essential for the further development of international business cooperation, the increase of mutual investments, and the creation of new production chains.

In this context, allow me to offer a few words on the investment climate in Russia. As you are aware, the World Bank is no longer operating in our country, therefore, it is unable to assess the domestic business environment. However, other independent bodies are fully capable of doing so. We undoubtedly possess the necessary intellectual potential.

This year, the Russian Agency for Strategic Initiatives (ASI) evaluated the business climate in our country and compared the results with those of other nations. In its new ranking, the ASI used the same methodology as the World Bank did. Over 800 criteria were taken into account, ranging from the process of starting a business to addressing insolvency issues.

The study has shown that Russia is among the global leaders in terms of investment climate. Moreover, Russia is ahead of all other nations in terms of the strength of its regulatory framework and the quality of public services. In specific areas such as business registration and real estate management, the country confidently ranks second.

Of course, certain areas still require additional efforts. We see and understand this, and we are fully aware of the need for further work. These efforts will be necessary from the Government, regional authorities, and the business community at large, with which the Government maintains constant contact. I am referring to the development of labour relations, the simplification of international trade procedures, rules of international trade, and the integration of engineering infrastructure. Significant progress has already been made in these areas, but there is still work to be done. Additionally, some other issues require our special attention.

I am sure our colleagues will organise comprehensive work and, in cooperation with the business community, will make significant progress in the near future.

Friends,

Russia is uniting the efforts of the state, society, and business to strengthen its economic sovereignty, achieve technological leadership, develop a sustainable, nationally focused banking system, and build a robust financial market. We extend an invitation to foreign partners from all countries who are interested in engaging with us in this endeavour in cooperating with us in this area. Such aspirations will, of course, be supported at all levels of government within the Russian Federation.

Thank you for your attention. I wish you all the best.

President and Chairman of VTB Bank Management Board Andrei Kostin: Mr President,

I would like to extend my sincere gratitude once again for your continued participation in our forum. This marks your 15^th address at our 15^th forum. As this is almost an anniversary event, the 15^th, and given the substantial changes in the composition of our audience over the years, I would like to take just two or three minutes to share the story of the forum's inception and your involvement from the very beginning.

The year was 2009, amidst the height of the global financial crisis, which originated in the United States. We now know that much of the ”darkness“ stems from there. At the time, I had a conversation with Josef Ackermann, whom I regard as one of Europe's most prominent investment bankers. The CEO of Deutsche Bank, he said to me, ”Andrei, make sure to tell Mr Putin that no great country can thrive without a strong investment bank.“

Upon returning to Moscow, I went to the President and told him, ”Mr President, while Russia is a great country, we lack a powerful investment bank; we need to establish one.“ The President's response was swift and unequivocal. He said, ”What can I do to assist?“

At that time, the investment market was dominated by foreign banks, such as Deutsche Bank, JP Morgan, Morgan Stanley, and Goldman Sachs. Russian investment banks were virtually non-existent, with only a few small boutiques, mostly founded by foreign citizens, such as Renaissance. And all these institutions organised forums for investors. I asked the President, ”Mr President, would it be possible for you to speak exclusively at our forum and not at others?“ And in 2009, the President attended our forum. He returned in 2010, and we were naturally concerned that following his re-election in 2012, he might not come again. However, he did, and since then, he has continued to participate year after year, transforming this forum into the prominent event it is today.

This forum has become, without a doubt, one of the most significant investment platforms, attracting the attention of financial experts not only from Russia but also huge attention from financiers across the globe. Today, we are joined by over 400 representatives from approximately 35 countries. While the profile of our participants has considerably changed over the years, I am confident that investors from the West are watching closely and listening attentively to President Putin's words here.

By the way, we took the opportunity to thank Mr Ackermann. We virtually ”kidnapped“ his team in Moscow – around 100 people. Initially, he took offence, but in time, he accepted the situation and even boasted once about having played a pivotal role in the creation of Russia's investment banking sector.

It was indeed a pivotal moment. Since then, the bank has firmly established itself as a leader in Russia's investment services market, exerting significant competitive pressure on Western banks, which have now exited our country.

This is why the forum has endured for 15 years. It is a crucial event, and of course, the President’s addresses remain the focal point. What distinguishes our forum is the open dialogue between the President and the audience.

I have heard from many forum participants that it is rare for a country's leader to answer all questions in the room for an hour or more – such a thing never happens. But it does happen here. Therefore, I suggest we now proceed to the second part of our forum – the Q&A session.

Mr President is ready to answer your questions today. However, please bear in mind that we are constrained by time, so I ask you to be brief. When asking your question, kindly introduce yourself, specify your country and your area of expertise. I am sure the President will be willing to address any of your queries.

Thank you.

Question: Good evening and thank you very much for giving me the opportunity to ask you.

Andrei Kostin: Where are you from?

Question: I am from Germany, I am the manager, CEO and the main shareholder of an investment company in Germany. So, thank you very much for giving me the opportunity to ask you a question, Mr President.

You repeatedly stated that economic sanctions are mutually destructive, and in particular, to those who have imposed them. And to be honest, I cannot agree more with that.

It is evident in Germany now that the current government now doesn’t have the best interest of the country’s economy, and, the thing is, they are quite hardly affected by the fact that German companies had to leave Russia. Numerous amounts of German companies.

So, my question is, to come back to my question, if the time changes, and the government, for instance, in Germany, or the governments in Europe would allow the companies to come back, to re-enter Russia, how would you treat them? Would you give them a second chance, or would the damage caused by the sanctions be irreparable?

So, that was my question and thank you very much for your reply.

Vladimir Putin: I think I said this at the last forum and in fact, I have mentioned it at any opportunity: we have never expelled anyone; we never tried to oust anyone from our market.

I do not think I am revealing a big secret either: despite the political pressure, many of our partners, including those from Western Europe and the United States, have not left the Russian market. Some of these companies continue to operate as before, probably about half of them; others have transferred management to the persons and entities they control. About one quarter of those companies have really left, while some continue to procedure to exit the Russian economy, including the largest German companies.

I am not saying that the German economy or European economies in general are going through a difficult period solely due to the severance of ties with Russia, but the severance of ties with Russia certainly plays a serious role. The Germans and other Europeans have lost stable and reliable supplies of Russian energy resources at affordable prices, but this is only a part of what it has led to, although a very important part. I will say a few more words about this right now, but other circumstances are involved, too.

They can no longer sell their products on our market; they cannot supply components to the industrial facilities in Russia that were built by foreign investors, including European ones. They can no longer use some of the transport routes, which used to bring a certain profit. The European currency, the euro, can no longer be used for transactions, and the use of the euro by the global economy as a payment instrument, as a reserve currency, in itself used to bring significant profits to the European economy.

You know the rest. Large companies are closing, in particular in Germany, while others are operating at a loss. As you know, glass manufacturing, chemical and fertiliser industries, agriculture are all suffering losses, serious losses, because they have lost the Russian market. Agriculture in Europe, in particular in Germany, has lost not only our energy resources, gas, which is the most important component in fertiliser production, but also Russian fertilisers. Whole industrial facilities are being closed, the metals industry, and as a result, further down the chain, the automotive industry – the most important sector of the economy.

As a result, according to the estimates of our and foreign experts, this year the eurozone economy will grow by about one percent, just over one percent, while Russia’s economy grew by 3.6 percent last year, and will add almost four percent this year, 3.9 percent or maybe even four percent.

As for Germany’s manufacturing industries, as far as I know – please, correct me if I am wrong – the manufacturing industries will decline by 4.6 percent, while in Russia, there will be a 4.4 percent upturn, with manufacturing industries adding over eight percent, 8.1 percent.

In addition to everything else, the Americans are prohibiting you from using the Russian market and our relatively cheap energy resources while creating profitable conditions for European investors, including German ones, in the US economy. Frankly speaking, behaving like this does not look like alliance, to put it mildly. But I do not want to go into these details. Germany knows this well. Will we create conditions for those who want to come back? We will not create special conditions. We have not pushed anyone out, we have not banned anyone; our doors are open.

The problem is of another kind. The problem is that over this time, in the past two years, companies from other countries have begun to actively fill many niches that were vacated after our European partners left. In addition, import substitution with Russian brands, the number of which is multiplying, is progressing very fast, at a pace we did not expect, to be honest.

So, it would be quite difficult to return to the places they used to occupy. However, we will not create any particular hurdles for this. The issue lies not with us but with the political decisions made at the level of the European Commission and in individual European countries, including Germany. You are welcome. It is not about us, it’s about you.

You know, I recalled something while I was talking. When I lived and worked in Germany, a friend of mine told me a story. If he hears me… I have not seen him for 30 years and do not know what he is doing. So, he was walking around Berlin, not just for amusement, but for work-related reasons. He came to the bank of the Spree River, and there was an old German man sitting there fishing. My friend asked him, ‘How are you doing, is the fishing good?’ The man turned around, looked up and said, ‘No.’ There was a pause. My friend asked, ‘Why?’ Another pause followed. This German fisherman turned around and said, ‘It’s an easterly wind.’ To this, my friend replied, ‘All problems and all dirt come from the east.’ The German sat there, thinking, then turned around and asked, ‘Are you Polish?’ Honestly, I am not making this up. My friend thought about it and said, ‘No, it’s worse than that.’ Now the German had to think about it. He raised his eyebrows, looked at my friend silently and did not reply at all.

Why did I recall this? Nowadays everything from the east is better than from the west. Look at the conditions created for the German economy here in Russia, and those created by your traditional allies and partners. We are now talking only about business environment.

Our doors remain open. For decades, we have maintained exceptionally warm relations with Germany, we understood each other very well. A hallmark of German investments has been their focus on long-term industrial endeavours rather than seeking immediate financial gains. Presently, we witness the challenges faced by Volkswagen. One must question why Volkswagen opted to exit the Russian market. Not only could it have thrived here, continuing to sell its products even with a high degree of localisation, but it could also have maintained the supply of components, thereby generating excellent revenue.

We have consistently engaged in market-based practices, refraining from implementing any form of non-market regulation, though it can hardly be called regulation. In fact, we have never subjected our German partners to the kinds of conditions found elsewhere, such as environmental investigations or similar matters. At present, it seems convenient to attribute all woes to Volkswagen's management, thereby sidestepping one's own errors. My reference here is to the governmental regulators responsible for pertinent decisions. It is not their responsibility; management bears the brunt of the blame. Now, Volkswagen employees are seen as culpable, with thousands striking due to factory closures and consequent job losses. To avert such outcomes, economic decisions should not be swayed by political motivations.

Finally, let us now address the most pressing issue. The paramount concern I wish to highlight is this: You represent the Federal Republic, do speak German! Why are questions posed to me in English? The crux of the matter is sovereignty.

Andrei Kostin: We lack a German interpreter.

Vladimir Putin: Come on! Tell me you didn't have a German interpreter.

Andrei Kostin: Let's proceed to the next question, please.

Vladimir Putin: Did you want to add something? Our colleague from Germany seemed inclined to add something.

Andrei Kostin: Perhaps you might convey something in German, Mr President.

Ladies, kindly pass the microphone to the gentleman from Germany who posed the question in German. The President appears to wish to comment, does he not?

(Speaking in German.)

Andrei Kostin: As the saying goes in The Diamond Arm [comedy]: an untranslatable pun.

Vladimir Putin: Our guest mentioned he had been forewarned about the absence of a German interpreter. My response was that the matter extends beyond interpretation; it pertains to sovereignty.

I recall attending Mr Schroeder's birthday celebration in Hanover. Though modest, it was dignified, yet everyone conversed in English, and even the Hanover girls' choir performed in English. It was quite disconcerting, you know? This is the essence of the issue. Sovereignty must reside within; that is where it all commences.

You know, I do not want to start this discussion. Our focus should be on the economy.

Andrei Kostin: Ok.

Sector One, please.

Waseem Hamad: Mr President, thank you very much. Waseem Hamad, CEO of a pharmaceutical company from the Sultanate of Oman.

My question is regarding Russia’s motivation for southward turn. How strategic and long-term is it? And if we take aside the large economies like China and India, does Russia have a tangible interest in pursuing economic relations with smaller economies in the Global South?

And my second part of the question, Mr President. If we assume a scenario of normalisation, not necessarily political, but at least getting back into normal business relations with the West, do you expect Russia to still consider the Global South as a priority? Thank you, Mr President.

Vladimir Putin: As you are, certainly, aware, everything that happens in security and politics stimulates the structural shifts in international relations that we are witnessing in the world.

When we say, or I hear someone say that Russia has pivoted to the East, or the Global South… Russia has not pivoted now to the Global South or East, no. Russia has engaged in this policy for a long time now, since the 2000s, mindful of the global development and global economic trends. We have been doing that for a long time now in an orderly and consistent manner.

Our relations with China are not impacted by events that are taking place, for example, in Ukraine. China has long ago become our largest trade and economic partner, even before that.

You just said that Russia will maintain relations with large countries, large economies, but what will happen if its relations with the global West get back to normal, though the global West does not exist, and it is becoming less and less global, because its share in global GDP never stops to shrink. As opposed to that, the share of the Global South and East continues to grow. According to the World Bank and the IMF, the growth rate of the developing economies will be double that of the countries that we are accustomed to refer to as the developed economies, and some economies are growing at quite remarkable rates.

Just look at Ethiopia. It has grown by, I think, 118 or about 120 percent in the past ten years, which is phenomenal.

Bangladesh boasts an 80+ percent growth. Many other economies in the Global South and East are developing at about the same rate, so we are naturally guided towards places showing economic growth with the growing number of our partners who are not looking over the shoulder to make sure they are acting in compliance with someone from the outside barking orders out at them.

By the way, speaking of restrictions, threats, and sanctions against third countries that cooperate with us. Do you have an idea of what is going on? The people who engage in this appear to have a good educational background, such as Oxford or Cambridge university, and should be intelligent people. However, watching them do what they do, I am not even sure they are. Or, perhaps, they are well-educated and intelligent, but something prevents them from reacting quickly and effectively to real changes around the world. What is standing in their way? You know, it is something what is popularly known as smug attitude, or snobbery. They think that they are entitled to do as they please and they will do everything as they planned, no matter what.

And the world is changing, and they cannot do everything. What I intend to convey is that their actions are accelerating the emergence of a multipolar world. This process is becoming utterly unavoidable and is indeed yielding certain results. A growing number of nations engaged in international discourse and economic activities are recognising that while aligning with premium, robust and technologically advanced markets is crucial, this alone is not enough anymore if we need and want to look ahead to the future. Therefore, we will undoubtedly be part of that future.

I am optimistic that relations with our Western partners will eventually normalise, primarily because it is in their interest and ours, of course, as well. However, despite this anticipated and, I trust, inevitable normalisation, a substantial portion of our collaboration with our current allies, or as we refer to them today, friendly nations will not merely persist but will also expand, because this is an unavoidable course of events.

Andrei Kostin: Thank you.

Who will go next?

Naila Mehrabova: Naila Mehrabova, a member of the Supervisory Board of Azersun Holding, Azerbaijan.

Mr President, thank you for your address and for joining us today.

In your view, what are the prospects for tapping the potential of BRICS countries to develop a collective digital infrastructure? Is it feasible to create a common international digital payment system within this framework?

Mr President, can independent developers aspiring to pursue this initiative rely on your support?

Thank you.

Vladimir Putin: This is an important and interesting subject. Together with our BRICS colleagues, we strive to pay due attention to it. I reiterate, this is not solely because someone is creating certain problems for us, which are, naturally, serious, and to a certain extent, we are hindered by problems with settlements, but also because – and this is the key thing – the global economy is developing, our relations are developing both with large and small economies, as I have just noted, answering a question from your colleague.

The number of partners is on the rise, and there is a collective desire not just for secure channels of economic interaction and settlements, but also for modern settlement mechanisms that would minimise expenses and bolster reliability of the international financial area. Naturally, this contemplates the adoption of modern technologies, including digital ones. Rest assured, we are committed to pursuing this path.

However, it transcends merely creating digital settlement systems.

We have proposed to our partners, and this was generally approved by everyone, to create within BRICS a digital investment platform that would also include settlements in digital units.

What course are we charting here? We have agreed to form a working group under the aegis of the BRICS New Development Bank, and this group is currently being established. We deliberated on this in Kazan with representatives from the People's Republic of China, along with our colleagues from India and Brazil – with all our partners. There is widespread agreement on this front.

Our aim is to create a digital platform that would facilitate investment in promising, growing markets across South Asia and Africa, in a manner that is both secure against inflation and enables regulators and central banks to respond in a swift and flexible manner to developments within our group.

That is, should there be a deficit, we could issue a corresponding electronic instrument. Conversely, in the event of a surplus, we could withdraw something from the market, and so forth. Basically, this is a relatively easy-to-create instrument; we merely need to reach consensus on its developmental trajectory and the directions for investment in specific countries and projects.

In my estimation, this is what our experts propose, this could be of significant interest both to the countries creating such an instrument and to those using it, meaning that the developing markets in Africa, Latin America, and Southeast Asia need these investments.

If we identify attractive, promising joint projects, invest in them, and subsequently reap the benefits from their operation, this instrument will prove to be exceedingly reliable and promising.

Naturally, in this regard, we are keen to engage a broad spectrum of our friends and like-minded partners. This includes one of our promising strategic allies, namely Azerbaijan.

Andrei Kostin: Mr President, as a follow-up, if I may. Recently, Mr Trump – who has not yet arrived at his White House (I say ‘his’ because some of our guests might not know that we have our own White House nearby where the Russian Government works, where sound decisions are taken whereas Washington makes various ones) – Mr Trump has said that if BRICS countries did not use the dollar, he would impose 100 percent tariffs against all those countries.

This is, perhaps, the first threat against countries in general. Earlier the Americans used to push around specific banks saying that they would keep punishing banks and companies. Perhaps, this is the first time they directly declared that countries will be punished and all products will be subject to a 100 percent tariff; this has come from a newly elected president.

As we all know, the Americans are very sensitive about this, because the US’ power is in the dollar, because the dollar is invested in. If there is no dollar with its position, then the US economy with its huge debt and everything the dollar encompasses, such as the enormous revenues of the banks, will collapse.

Do you think this step by the new president will finally undermine trust in the United States, its policies and financial system, and force BRICS countries and other states to dump the dollar and flee this system even faster in favour of creating new forms such as those being developed within BRICS?

Vladimir Putin: First of all, I agree that using the dollar as a world currency brings the United States unearned money in large quantities. According to our experts, somewhere over the last ten years they have made US$10 trillion out of thin air, just for the fact that the dollar is used as a world reserve currency; they did it on rates, deposits with their banks, and so on. Ten trillion is a lot, it means that they consume more than they produce. And this is very important.

In fact, the United States continues exploiting other economies of the world for its own benefit by using the dollar. Few think about that but this is a fact, and I agree with you on that. This is the first point.

Now, you have said the newly elected President Trump threatened to impose sanctions and introduce higher tariffs on those who do not use the dollar. As far as I understand, he did not say that. I take it that everything US-related elicits a certain response with us. Although I do not have much time to follow all the developments somewhere “overseas,” as far as I could see, I noticed this – he said that if someone prohibited or restricted the use of the dollar, then he would react accordingly. This is not the same thing. It is one thing to prohibit the use of the dollar, and another thing not to use it. You see, these are completely different things. That is my second point.

Third. After all, the president-elect has been out of the White House, which you mentioned, for four years now. Certain changes have taken place in the global economy and the US economy during that time. His successors, his political opponents, have done a lot to undermine the fundamental role of the US dollar as the world’s reserve currency. Above all, this is the outcome of their own making, since they used the dollar as a tool in their political and maybe even armed battles, in order to cause harm to other countries, which the current US government still looks at as its adversaries. We have never considered them our adversaries, but they suddenly decided that we are adversaries and began to impose restrictions on us. Since the share of the United States in the world economy is shrinking, meaning that the US dollar is losing its influence on global economic processes, other processes involving the use of other tools are naturally occurring.

For example, can anyone ban Bitcoin? No one can. Who can ban other electronic means of payment? No one, because these are innovative technologies, and no matter what happens to the dollar, these instruments will keep evolving one way or another, because everyone will strive to cut costs and increase reliability. It is an unavoidable process, and the dollar has absolutely nothing to do with it.

However, if the dollar gets used less and less around the world, and this will be the outcome of their own making, they will, of course, undermine the foundations of their economic power if they do so. This is absolutely clear, and I completely agree with you.

Finally, we never turned the dollar down. Did we ever? We were denied the opportunity to use it. We have a saying, they got what they fought for. They ran into problems with the dollar. Now, of course, is the time to ponder next steps. This all comes from smugness and arrogance in the economic sphere, among others, which is unacceptable. One needs to be aware of the global processes and build one’s own policy, including international policy, based on this knowledge.

Look at what is happening in a natural way. Even the unconditional allies of the United States are reducing their gold and foreign exchange reserves, both in US dollars and euros, by the way. Over the last ten years, the cut has amounted to about 13 percent, which is significant. This is a natural process, and no one will be able to reverse it, especially with the use of sanctions and coercive methods, which are destructive for the economy and for those who make such decisions in the first place.

Andrei Kostin: Thank you very much.

But you should probably suggest that he proceed with caution next time you talk to him.

Vladimir Putin: Mr Trump does not need anyone to give him advice or recommendations.

Andrei Kostin: I see.

Ok, colleagues, who is next? Could we have a question from sector four, please?

Question (retranslated): Mr President, good afternoon. Colleagues,

I represent a Chinese company from Qingdao, a state-owned, diversified conglomerate.

I have the following question for you. Recently, the Central Bank of Russia had approximately half of its foreign exchange reserves frozen. Yet, this does not seem to have had any serious repercussions. Does this mean that the reserves are not truly necessary? If so, why bother accumulating them?

Thank you.

Andrei Kostin: Thank you for your question.

Vladimir Putin: Indeed, it is a valid question: why accumulate reserves if they can be so easily stolen?

Incidentally, China holds substantial foreign exchange reserves invested in US securities. However, we observe that these are gradually diminishing.

Why accumulate them if they can be lost so easily? Initially, no one considered that it could be done with such ease. It was presumed that economic decision-makers acted with prudence and were aware of the risks involved in undermining international law in this domain.

Yet, the United States and Europe have made such a move. However, they have not completed the final act. They have frozen, but not outright confiscated, these assets from us. Consequently, we were compelled to implement certain measures: redirecting the dividends of Western companies operating in our country to the so-called C-type accounts, among other actions, which we are not particularly pleased with, as it is a forced measure.

Yes, indeed, over 200 billion is frozen in Europe, with another 100 billion, totalling around 300 billion. More in Europe – over 200 billion – and less in the United States. But, I reiterate, they have not yet taken the final step to appropriate these assets.

The question is: why accumulate reserves? Historically, they have served as a tool to mitigate the risks. In times of financial market fluctuations, when super profits arise, the state siphons off a portion of these profits. Then, when profits decline, the state utilises them to honour its commitments, especially in the economy and, foremost, in the social sector.

This serves as a stabilising mechanism, and we have been employing it.

But there is a pertinent question: what to do with these funds if they exist? Yes, this requires consideration. Typically, states accumulate reserves to avoid the so-called Dutch disease, where super profits arise unexpectedly, opportunistically, and the state starts using them, often inside the country, without fully appreciating the risks, causing a sharp rise in inflationary pressure. Because the domestic economy does not produce enough goods to match the sudden increase in money supply, leading to inflation or even hyperinflation. Hence, these reserves are traditionally invested in foreign assets, including foreign securities denominated in foreign currencies.

However, it appears that it is an unreliable method. So, where should one invest? In education, science, cutting-edge technologies, and real estate – which, incidentally, many of our Chinese partners and friends are already doing – investing in deposits and minerals. These tangible assets prove to be more reliable than the financial instruments of other countries, particularly since, as it turns out, they use these instruments for political ends. In my view, and I have already mentioned it today, this is to their own detriment. But it is their choice, and we must focus on what we must do to safeguard our interests.

I believe that investing in technology, education, science, and logistics is the most reliable course of action.

Andrei Kostin: Thank you.

Colleagues, next question, please.

CEO Bahram Bahramsiri: (in Russian) Good afternoon, Mr President.

(In English) I am Bahram Bahramsiri, the CEO of the North-South Corridor Development Group from Iran.

Considering your efforts of developing the North-South Corridor and the follow-ups with the previous and current president of Iran, my colleagues and I have worked hard in the past three years to form the private and public sectors of Iran in the form of concession for serious activity in the North-South Corridor. Therefore, we are very interested now in knowing your opinion on the following questions.

What is the prospect of cooperation between the private sectors of Iran and Russia in the development and optimisation of the North-South Corridor?

Is there a plan for joint investments of BRICS, the Shanghai Cooperation Organisation, and members of the Russian economic community in this Corridor?

And one more thing, how can Iran and Russia use each other’s economic potential? There is also talk here about the possibility of joint investment in shipbuilding.

Thank you very much for your attention.

Vladimir Putin: Regarding the development of new logistics routes, you know that this is an inevitable process in light of economic and trade growth. Of course, it has intensified because of the problems that are being created for us by external forces, including in logistics. We have to look for new routes, which we are doing, and we are finding them. But it is an inevitable process anyway because of the growth of global trade and the limitations of existing routes and their throughput capacity, as well as the growth of geopolitical risks.

Take the Suez Canal. The volume of freight transportation through it has decreased, which I regard as regrettable not only because this has affected the economy of Egypt, a friendly country that is sustaining heavy losses. Its budget revenues have decreased by nearly one third, which we are not pleased about.

The main reason for this is geopolitical risks and America’s active and aggressive moves in the Middle East. This has engendered a response from the resistance forces in that region. The economy and logistics routes have been affected. Many shippers are now sending their freight around Africa, and so on, for that reason, but also because the volume of trade is increasing and there is a growing interest in other routes, such as the Northern Sea Route along the Russian coast in the Arctic. The volume of transportation via this route has increased several-fold since the Soviet period, and we will continue to increase it.

We have a programme for building ice-class vessels and icebreakers. We have the largest icebreaker fleet in the world. In particular, we have seven nuclear-powered ice breakers and 34 icebreakers with conventional engines. We have seven nuclear-powered icebreakers, and we have plans for building more of them.

The climate is changing, and the number of days for unimpeded pilotage is growing. We see that many countries, first of all, our Asian partners, such as India, China and many others, are interested in using that route and in working on it. We have a programme for the development of ports in that region, with access routes and so on.

Certainly, the North-South Corridor has major significance in this context. It is already operational, and freight traffic volumes along this corridor are constantly growing. Freight consignments are delivered by motor vehicles, trains and ships navigating the Caspian Sea, and their volumes are constantly growing.

Speaking of our plans with Iranian friends, you are surely aware of the need to build a 162-km railway section between Rasht and Astara. We are committed to achieving this goal as we have coordinated and signed all documents to that end. There is a number of technical issues we need to resolve as per our agreement with our Iranian friends, they should be addressed by the Iranian side. We are talking about ensuring that rail tracks are laid on the land plots that should be free for the implementation of such projects.

Although there are certain challenges, it is clear that many consignors have a strong economic interest in reaching the Indian Ocean and the Persian Gulf, as this route enables direct and seamless freight traffic from the Baltic Sea coast, from St Petersburg to the Persian Gulf and the Indian Ocean.

Our northern and southern partners, including our Indian friends, are interested in this initiative. I am confident that these projects will come to fruition, although they will require substantial investment, the overall amounts of which have already been calculated. We already know how much this will cost, and the resources needed are available.

We are interested, of course, in attracting more and more participants and investors in these projects. There is great interest in them as they minimise geopolitical risks and create favourable conditions for stable operations.

Regarding bilateral relations, we maintain stable trade and economic ties, and we anticipate an increase in our trade volumes this year. We are implementing successful large-scale projects in the sphere of logistics, as we discussed earlier, as well as in energy and industrial cooperation. By the way, this also includes the security sphere.

Therefore, bilateral collaboration has good prospects, including cooperation with the Eurasian Economic Union (EAEU) that you mentioned. We have signed an agreement on a free trade zone, and I believe the Iranian leadership is interested in working more closely with the EAEU, including as a permanent observer. We fully support this, and we will pursue it.

Additionally, we have finalised a fundamental treaty that will regulate all issues linked with our future cooperation. I hope this treaty will be signed during the Iranian President’s upcoming visit to the Russian Federation.

Andrei Kostin: Thank you.

Colleagues, who is next? Please.

Sun Tianshu: Good afternoon, Mr President.

My name is Tianshu. I am the founder of the Russian-Chinese digital trading platform QIFA.

I have been living and working between Russia and China for exactly 31 years. Over the years, I have seen with my own eyes how you, with your wisdom and strong will, are building a new and modern Russia. I would like to express my deepest respect on behalf of Chinese businesses.

Vladimir Putin: Thank you.

Sun Tianshu: I have a rather simple question for you. These days, we see more and more new Chinese cars on the streets, but the majority of these cars are delivered from China fully assembled.

My question is, are there plans to partly or fully localise the production of Chinese cars in Russia, in order to expand Russia-China cooperation from trade to investment?

Thank you.

Vladimir Putin: Indeed, we did not begin our relations with our Chinese friends in the car manufacturing industry yesterday. The actual work began in 2015. The discussion of these projects had begun even earlier but in 2015, I believe we launched the first production facilities in Tula and later in Kaluga.

First of all, the reason does not lie in the fact that, for example, German car manufacturers started to leave Russia. The reason is mainly that Chinese manufacturers offer better quality than European ones – and also at more competitive prices. This is the main reason.

We consider the measures against Chinese car industry that, say, Europe and other markets take, to be absolutely wrong and harmful for the global trade, global production and global car manufacturing. They are politically motivated and will not bring any good results because they will inevitably lower the competitiveness of those who are competing with China in this segment of the global economy and global production. Chinese goods have simply become better in terms of quality and more affordable, that is all. Our Chinese friends have managed to attract the most experienced, interesting and promising professionals, including from the countries that were once leaders in global car manufacturing. They have succeeded in creating truly competitive products.

Certainly, like any other country, I want to stress this, including the People’s Republic of China or any country in the world and any economy at all, we strive for ultimate localisation – that is, for manufacturing car parts in our own market, in our own economy and using our own facilities.

A well-known instrument called a special investment contract can be used for this purpose, with the level of support from the state being directly proportional to the level of localisation. This instrument is well known. I will not go into details right now regarding the percentage value of the perks available and the percentage of localisation required. But this process does exist.

We implement the same policy with our Chinese friends. Everybody is very understanding about this policy. The terms and scope of support from the state is the main issue. But we will reach an agreement with our Chinese friends on this matter, as we usually do in other areas of our cooperation.

I want to congratulate Chinese companies on their outstanding achievements in car manufacturing.

Thank you.

Andrei Kostin: Next question, please.

Arvind Abrol: Mr President,

Arvind Abrol, CFO, Sun Pharma Russia, one of the leading pharma companies working in Russia for more than 30 years.

Mr President, you know that Russia has experienced a colossal outflow of foreign investment, which has not ever happened in the world history.

So my question is that, what is your view, how Russia is going to adapt in the current situation? How is Russia going to adapt now? Thank you.

Vladimir Putin: You know, Russia has almost fully adapted to this situation. Yes, the outflow of foreign investment was obvious. But first, investments in fixed capital are growing, as I have said just now, which is apparent. They are growing, in part, because we are creating new brands and supporting our own domestic producers.

This probably came as a surprise to those who imposed certain restrictions in the sphere of economic cooperation. They probably thought, as I pointed out in my address, that our enterprises would shut down and thousands of people would be left jobless. But our unemployment rate is 2.4 percent now. All our enterprises are working, and we are short of personnel.

Of course, it is necessary to secure the investment process. Overall, we have succeeded in doing so. For example, investments from friendly countries are growing. I will not provide the figures now, but they have increased substantially, and these channels cannot be closed because they are connected with economic interests. This is not being done out of political considerations, but it is happening.

I am confident that those who tried to prevent this now regret their previous decisions, because they have turned out to be ineffective. But those who made those decisions are not flexible enough to change their stance. Our Government and the Central Bank, apart from creating conditions for reliable investment and ensuring the safety of the invested funds, have also created a system for supporting the promising and most important spheres of economic development, including within the framework of national projects and the achievement of national development goals.

We have formulated these programmes, and we are trying to focus on the most important spheres of activity and to support high-tech sectors. The 8.1 percent growth in manufacturing is telling indeed. Moreover, such growth is not only due to the defence enterprises. The system has been effective in the economy and industry as a whole.

That is why we created the necessary conditions and ensured the liquidity of our financial institutions. Of course, there are questions about the 21-percent key rate, yet the volume of loans issued by Russian banks to economic operators, primarily, enterprises, continues to grow.

As I have said, we can obviously argue about complicated issues, but the fact is that the volume of investment is growing. This has become or has been made possible, in part, because we started by ensuring the uninterrupted, smooth and confident operation of Russia’s national financial institutions. The set of measures we used is no secret, in principle. Everyone can take a closer look at it. But overall, it is in these spheres that we have achieved the result you have mentioned, and I can repeat that this is indeed the case.

Andrei Kostin: Colleagues, we have been working for almost 90 minutes now. We will take two more questions at most. Who is the brave one? Go ahead, please.

Vladimir Putin: There are many brave ones.

Andrei Kostin: There are many brave ones, indeed.

Question: Thank you so much, Mr President, for the privilege to ask you a question. My name is Clever, my surname is Light. I am Nigerian – Africa’s largest economy, – and I speak English, as we were colonized by the British. I am the President of King of Kings Integrated Limited.

Vladimir Putin: Why does the Federal Republic of Germany speak English? They were never a colony. (Laughter.)

Question: And also the Vice Chairman of Infinity Citizens Limited. We deal in international trade, and we are also a government contracting firm.

My question, Mr President: we have seen recently a significant increase in Russia’s foreign policy contacts in Africa. I would love to know, Mr President, what these contacts are for, what are they about, and also I want to know what does Russia stand to achieve from this cooperation with these African contacts. Also, how far have you achieved these goals and objectives in Africa? And what do you think about the response from your contacts in Africa?

And lastly, I want to say Africa is with you, Mr President, thank you.

Vladimir Putin: Thank you very much. Thank you, especially for the last remark.

Indeed, Nigeria is a major economy that is making big strides and has good prospects not only because there are lots of opportunities in the energy sector, but the economy in general is diversifying. We are very happy for you, we welcome you and we are confident that your country will keep up the pace in the future.

I have already mentioned the growth of trade, so I will have to repeat what I said earlier. The African continent has bright growth prospects. Indeed, we – and you especially – are aware of all the problems that Africa faces, but the prospects are very good.

By the way, these are not our assessments. These assessments were provided by the global expert community, including the Western expert community. Many of my friends from Germany and other European countries say that they are also willing to develop and step up their activity in Africa.

The urbanisation level remains below the world level which stands at about 65 percent. By the way, we, in Russia, have it, I think, at 75 percent, and Asia has the same level. What does this tell us? The urbanisation will continue to grow, no doubt about it. The population growth rates are very high, which means there will be a catch-up growth in living standards. It is inevitable. It means the latest economic tools and technology will be implemented. So it is just a natural process of expanding our cooperation with Africa.

Among other things, Africa is a rather outlying continent geographically, but is close to us in spirit, because Africa is home to courageous and freedom-loving countries that value their sovereignty and, based on it, make and, we are sure, will continue to make decisions in the best interests of their peoples and their countries. In this sense, Africa is our reliable partner.

We have numerous ties with the peoples of Africa. I am speaking, of course, about the years of struggle for independence and liberation from colonialism. Nothing has ever separated us from African countries or from the peoples of Africa. Everything that we have unites us.

We are particularly excited about the growth prospects of the African continent. Of course, we will do our best to raise the level of development. Unfortunately, the trade is not as large as we would like, about 25 billion, but the prospects are good.

During the two forums held at the highest level, we have had the chance to sense the African leaders’ frame of mind. No one of them is asking for anything. Everyone is talking about one thing which is to build mutually beneficial cooperation which we will, of course, do and we will create new instruments.

A decision was made to create a special fund for promoting cooperation with African countries. I am confident that we will step up bilateral efforts and our efforts to expand cooperation with various African associations. I am sure that the result will be very good.

Question: Mr President, good afternoon.

My name is Harun Çelik. I was born and educated in Turkiye, but for the past 15 years, I have been living in Russia and working at Baltikstroyalyans.

My question is as follows: There are various strategies worldwide for addressing inflation, ranging from ignoring the issue to stringent regulation of prices. In Russia, this responsibility predominantly lies with the Central Bank, which operates somewhat autonomously. Could you explain the rationale behind Russia's adoption of this particular management model in this context?

Thank you.

Andrei Kostin: Excuse me, are you from Turkiye?

Harun Çelik: Yes, I am.

Andrei Kostin: I see. That explains why inflation is a concern.

Vladimir Putin: Yes, you are right, the inflation rate is notably high. What is it currently in Turkiye – around 80 percent, correct? It fluctuates, but it is about that.

Less than 50 percent? Well, my congratulations. It was 80 percent just recently, and now it is below 50 percent. This is genuinely commendable progress and a positive trend. And the pace is impressive. So, I extend my congratulations to the country's financial authorities for achieving this result. Just recently, it was 80 percent, and now it is under 50. This is indeed good news.

Regarding how this matter is handled in Russia: as per Russian legislation, the Central Bank has its own set of powers, distinct from those of the Government of the Russian Federation, particularly in the domain of combating inflation and regulatory actions in this sphere.

The primary responsibility, the main weight of this task, rests on the shoulders of the regulator – the Central Bank of the Russian Federation. As you are aware, inflation has risen, as I mentioned earlier; it is currently at 8.8 percent, an increase compared to last year when it was approximately 7.5 percent, and now it is 8.8 percent.

Consequently, the Central Bank had to increase the key rate to 21 percent. There are critics, many of them, who argue that this stifles development. There are experts who contend that this measure is unavoidable. Some suggest that a 21-percent key interest rate compared to an inflation rate of 8.8 percent is excessive.

I will not venture an opinion on whether this is beneficial or detrimental. I merely wish to point out that, naturally, there are certain challenges for the real sector of the economy, yet lending to this sector persists. There are advantages and disadvantages regarding the placement and growth of income from households' money deposited in banks.

On one hand, this is positive; deposits have increased, and the incomes of individuals who have bank deposits are rising, which is beneficial. However, not everyone holds bank deposits. For those who do not have such possibility, to have accounts in the banks, the burden associated with inflation is challenging. In other words, the less affluent bear the brunt as prices climb. Without bank deposits, they do not receive additional income. And these individuals are likely to constitute a sizable part, if not the majority, compared to those with substantial bank accounts. This is also something to think about.

As for expanding production, manufacturers continue to have access to loans and are therefore able to invest, as I said in my address and repeated just now. But the most important factor here, the most important tool to fight inflation, is to ensure sufficient output of goods and services that the economy needs. This is a very important point, and it is essential to achieve a balance where the economy can grow, with goods and services supplied to the market in the right volume, of the right quality and at the right prices, and inflation is brought down to the stated target. Our inflation target was four percent by some year. I hope we will achieve it.

For that, it is essential to ensure a seamless, highly skilled and solid cooperation and collaboration between the Government and the Central Bank, even though they have separate and distinct powers under Russian laws, meaning that the monetary regulator’s independence is ensured by law. I think that we will continue to work in this way, in this paradigm, rather than mixing up the responsibilities of the Central Bank and the Government.

I see my role in directing them to work together to find the right balance in managing our credit and finance.

Naturally, much depends on the Government here, because many participants in economic activity are clearly struggling with difficulties caused by the recent key rate hikes. It is very important for the Government to correctly identify priorities for ensuring economic and technological growth. There are tools that the Government can use to ensure strategic interests of the Russian economy. I am not going to list them now, but there are many of them. We have the Industrial Development Fund and so on, where the state, the Government subsidise bank interests and so on. We have a substantial package of support tools.

It is necessary that the set of tools the Central Bank uses in pursuing its policy, and the set of tools the Government uses to support economic growth and technological progress of the country fit together.

This, in turn, requires solidarity between the regulator, the Central Bank, and the Government. So far, we have managed to achieve this. I hope that this process will be maintained in the near future, and that the final result will be economic growth and inflation containment.

Andrei Kostin: Thank you.

Colleagues, I wish to extend my gratitude to all participants at our forum today. I would also like to express my thanks to the speakers from our morning session: Elvira Nabiullina, Maxim Reshetnikov, and Maxim Oreshkin.

Vladimir Putin: However, I see a colleague has already taken the microphone. Go ahead, please.

Question (without translation).

Vladimir Putin: Mr Kostin said, ”we are finished,“ and the translation stopped immediately.

Andrei Kostin: Kindly activate the translation; not everyone has mastered Chinese.

Question (retranslated): Mr President,

I have been affiliated with the Greenwood International Centre for two decades. I recall attending the Eastern Economic Forum in 2018, where I heard your address and had the opportunity to engage with you. Once again, I am privileged to communicate with you on this occasion.

The Greenwood International Trade Centre currently encompasses around 14 countries, with 100 companies representing these countries being actively engaged in trade and commercial operations, including Turkish enterprises, and over 180 Chinese companies fostering relations with their Russian counterparts through our centre. We are reaching agreements.

Our centre is presently focusing considerable attention on the Chinese automotive industry. Chinese car manufacturers, including leading brands, are participating in this initiative. We would like to take this opportunity to invite you to Greenwood Park for a discussion and an exchange of ideas. Should you have the opportunity, we would be delighted to discuss specific issues with you in a congenial and friendly atmosphere. Your support and attention are invaluable to us. Looking ahead, we are keen to learn how Russia plans to enhance the overall investment climate and adjust its strategies within our business sector. We would also appreciate your insights on these matters.

Thank you.

Vladimir Putin: We have developed a whole range of instruments that sustain a favourable environment for our potential investors. Foremost, among these are assurances for the protection of invested capital and the generation of returns. We are committed to advancing and supporting these two key areas.

I am confident that the progress made, particularly in the development of our relations and trade ties with the People's Republic of China, is self-evident. The trade turnover between Russia and China has reached unprecedented levels, exceeding $240 billion, in dollar equivalent. This is the best evidence indicating that the mechanisms in place – both in China concerning Russian investments and economic operators, and vice versa for Chinese entities and investments in Russia – are functioning effectively.

However, we continuously scrutinise developments in this domain. This success is largely attributable to the diligent oversight by the governments of the People's Republic of China and the Russian Federation.

Our predominant challenge today lies in the realm of settlements. There are no secrets here, and the reasons are apparent. Nevertheless, nearly 90 percent of our trade is now conducted in national currencies, namely the yuan and the ruble. Additionally, we are poised to leverage the electronic capabilities of our central banks. Significant expert-level collaboration is underway between our central banks, alongside the investment platform I mentioned within the BRICS framework.

We will employ all available tools to ensure that our cooperation is reliable, safe, and conducive to wider development opportunities.

Thank you for the invitation to visit your organisation. You mentioned creating a good atmosphere for discussions. I think I know what kind of atmosphere will be created and I would gladly visit you at some point.

Andrei Kostin: Thank you, Mr President.

Vladimir Putin: Let us move to this side of the audience as I take the last question.

Andrei Kostin: Who would you choose?

Vladimir Putin: It does not matter. There, somebody has a question. Go ahead, please.

Question: Good afternoon, Mr President.

I have been living and working in Russia for over 10 years. I have worked in the oil sector and in the automobile industry. I first saw you up close in Kaluga more than 15 years ago. Today, I am the official trade and economic representative of China’s Jiangsu Province in Russia.

As you are aware, interregional cooperation is an important factor of economic development. I would like to ask you about visas. What might Russia do in the next few years to simplify international travel, including for business, study and tourism?

What is Russia’s policy on supporting the families of foreign citizens who are long-term working residents in Russia, including visas for their minor children and their enrolment at educational institutions here?

I would also like to invite you to the Jiangsu Province. We in China say that above there is heaven, below there is Jiangsu. Jiangsu is waiting for you.

Thank you very much.

Andrei Kostin: Yes, going to Jiangsu first would be preferable.

Vladimir Putin: Thank you very much. You have asked an important question that is relevant for those who are doing practical work to develop our cooperation and the strategic partnership between Russia and the People’s Republic of China. It is thanks to people like you that we achieve the results I have mentioned.

You have pointed out several elements. One is visa support, which we provide. These issues are addressed on the principle of reciprocity in all countries. I believe that our Chinese friends and we are doing more for each other than we do in our relations with third countries, and we will continue to do this. That is the first point.

The second important element is regional cooperation. I fully agree with you on this point. The volume of interaction between regions in the Russian Federation and the People’s Republic of China keeps growing, which is logical, because people there know each other well, often exchange visits, understand the situation in their regions’ economies, and see what can be done for their development. I know this from my colleagues and from the heads of Russian regions that border on the respective Chinese provinces. Even the regions that do not have a common border with China are developing cooperation at the regional level.

It is extremely important to create the necessary conditions for those who are promoting our mutual interests on both sides, as well as to take care of their families.

I would like to note, though, that the families of foreign professionals who permanently live in Russia have the right to enrol at Russian educational institutions as it is. Moreover, unlike in many other countries, the family members of these professionals have the right to seek employment in the Russian Federation.

We should probably regularly review the situation in this sphere, looking for additional opportunities to support those who work in these spheres professionally, since it is easier for them to pinpoint problems because this is what they have been trained to do.

You have mentioned a Chinese proverb regarding the Jiangsu Province. Another Chinese proverb has come to my mind now: The higher you go, the farther you can see. You have risen high, and so you understand these problems better than many others. Thank you for drawing our attention to them. I have made a note for myself. We will see by all means what additional measures can be taken.

I promised to move to this sector. Please, pass the microphone there.

As I see it, this will never end; it can only be stopped.

Question: Respected President, thanks for this opportunity.

I am from India, Ankur Goel, CEO of ”Skwerup Capital Partners“.

So, since we know that BRICS is taking a new shift in terms of promoting and, you know, accelerating the growth for the SMEs, basically, how do you see the need for a fast dispute-redress forum where the small and the medium-sized enterprises can feel comfort while dealing cross-border, especially in the BRICS Plus countries? So, I would like to know your view on the issue.

Vladimir Putin: This is a very good proposal and we try to act on it. However, as you pointed that out, I will ask my colleagues who analyse the situation within BRICS based on the main areas of cooperation, and we will certainly bring it to the attention of our Brazilian colleagues, since they will preside over BRICS next year.

This is highly relevant to us because, under the import substitution programme, a large number of new Russian brands are entering the market to replace our former Western partners who voluntarily left the Russian market. They are making significant strides and achieving very success – not only in the mass production sector but also in the IT sector and in high technology in the broad sense.

By the way, in agriculture, the number of our producers is growing. In 1988, the Soviet Union imported US$35 billion worth of grain. Last year, we exported 66 million tonnes of grain. In many cases, producers, farms and so on are covering their costs. Therefore, in all Russian sectors, including in high-tech sectors, the demand for expanding sales in increasing. We are extremely interested in this.

I know that, at Prime Minister Modi’s initiative, India is pursuing the same policy. Everybody knows the slogan: “Make in India.” On our part, we are ready to open certain production facilities of our own in India.

Let me remind you that the largest investment in the Indian economy in recent times was made by Rosneft, which invested US$20 billion. The fact that the Prime Minister of India and the government are creating such reliable and stable conditions is largely due to the Indian leadership’s commitment to a nation-oriented policy across all areas, including the economy.

We consider investment in India to be stable and highly profitable. But we are also interested in supporting our own producers.

Thank you for this idea. We will certainly work on it.

Andrei Kostin: Colleagues, let’s wrap it up.

Thank you so much, Mr President.

Vladimir Putin: Thank you. And a big thank you to the organisers.