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Meeting on economic issues

February 9, 2011, Gorki, Moscow Region

Dmitry Medvedev held a meeting on inflation control measures and investing scheduled saved expenses in modernisation projects.

Deputy Prime Minister and Finance Minister Alexei Kudrin said that at least 50 percent of the scheduled saved expenses as well as part of the federal budget’s additional incomes would be spent on modernisation.

The meeting paid particular attention to the situation on the food market. Economic Development Minister Elvira Nabiullina and First Deputy Prime Minister Viktor Zubkov briefed the President on the current situation and the measures being taken, in particular, grain interventions. 

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President of Russia Dmitry Medvedev: We have two issues on our agenda today, routine items, but both important. The first concerns investing the scheduled saved expenses and potential additional incomes to the federal budget in priority modernisation projects. I gave this instruction in my annual Presidential Address to the Federal Assembly. The Government has taken the first steps in this work and decided that half of the saved funds will be spent on modernisation, and we have agreed on this. 

Today, we need to decide how this money will be distributed, and discuss possible additional incomes too, how to allocate this money, how often, and how much. We also need to decide on the amendments to be made to the budget, and on who will be supervising this process, though we have plenty of watchdogs in the country.

I know that there are planned financial reserves in the budgets of the regions, ministries and agencies. This has been confirmed by reports from the Accounts Chamber and fiscal control bodies too. These funds need to be invested in specific modernisation projects, and of course we must ensure that they are spent effectively. After all, we are talking about taxpayers’ money here, and it must be spent wisely and invested in projects that will produce results, in building a modern economy, cutting costs, and ultimately creating the conditions for giving our people a higher quality of life. 

The second issue I want to discuss with you today is inflation, above all, price changes for foodstuffs and other socially significant goods. 

The economy is recovering now, showing moderate growth, but food prices continue to rise. True, they are rising not just in Russia but in other countries too, and in this sense our situation is not unique. In some cases price rises in Russia have to do with objective circumstances, the fact, for example, that last year was a tough year with drought and a poor harvest. In some cases the reasons are subjective, including the sudden surges in demand for particular foodstuffs. 

Speculators played on people’s worries about the poor harvest and their natural tendency to try to stock up just in case in early autumn. I ended up having to intervene especially on this issue, as did some of the other members of the Government. But the situation remains problematic today. The consumer price index rose by almost 2.5 percent in January. Our colleagues will give more detailed information on this. Prices have risen more for some types of goods and less for others. 

We need to be very attentive to these kinds of fluctuations on the domestic food market. I am talking about the wholesale side and the retail side too. We need to take timely action here, sensible decisions that will prevent any economic imbalances, and address too any negative expectations on the markets.

I know that the decision was made to sell grain from the intervention fund. I hope you will tell me how you plan to carry this out. In December, we discussed measures of customs tariff regulation and these interventions too. I want to hear in general what the Government is doing to keep food prices in check, as this is an issue on everyone’s minds around the country.

I remind you, in conclusion, that the state authorities took a series of steps to support the agricultural sector and ensure that the next sowing campaign goes ahead. The preparations have already begun. In this respect, I draw the attention of all federal, regional and local officials, and heads of financial institutions, to the fact that the financing decisions in this area must be carried out and the money must be distributed. This money must reach the farmers so as to ensure they get the seeds, mineral fertilisers, and fuel and lubricants they need.

We realise that this year’s harvest will determine the situation on our country’s food market. We cannot influence the weather, but we must put in place the necessary economic conditions. 

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Once again, I draw the Government’s attention to the need to use all possible means to influence the situation on the food market, all economically balanced mechanisms.

All of this pursues just one goal, namely, that our hopefully effective and coordinated action will slow down inflation and stop food prices from rising as fast as they did at the end of last year and start of this one. This is vital for the success of our Government’s work.

February 9, 2011, Gorki, Moscow Region