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Meeting with Accounts Chamber Chairman Alexei Kudrin

December 11, 2019, The Kremlin, Moscow

The President had a working meeting with Chairman of the Russian Accounts Chamber Alexei Kudrin. The discussion focused, in particular, on the results of performance monitoring of the National Projects conducted by the Accounts Chamber.

President of Russia Vladimir Putin: Please go ahead, Mr Kudrin.

Accounts Chamber Chairman Alexei Kudrin: Mr President, the Accounts Chamber is monitoring the implementation of national goals and the National Projects. We identify and explore the issues that pose a risk in their implementation, and look for proposals and recommendations to achieve these goals and National Projects.

This year, we analysed all the National Projects and reviewed them at a board meeting attended by representatives of the ministries and departments that are responsible for these projects. We have generally identified the issues that the ministries found important; as a rule, they were grateful for all our comments, and are now working on the issues mentioned.

As for the key issues, I would like to say that, first of all, some of the targets stipulated in the Presidential Executive Order are not fully reflected in the National Projects. For example, the Environment project states the need to ensure clean water, but it does not include the regions or districts and towns that still have no centralised water supply. And there are more such discrepancies.

Vladimir Putin: As far as I know, there is a separate programme on water supply.

Alexei Kudrin: Yes, we have a programme for clean water supply, but its targets do not include all residents. For example, as I said, places where there is no centralised water supply, those regions are not covered in the National Project targets.

Or, for example, environmental safety in the Volga River basin. There are 29 regions that affect the river’s environment, but only 16 are participating in the National Project, while the others are not tasked with reducing pollution in the Volga basin. And so on.

In each case, we analysed every performance indicator and the achievement of the final goal and noted that there are cases in almost every project when National Project indicators, and sometimes even their implementation, do not always help achieve the final goal. They must be adjusted and perhaps even made to include a broader range of issues.

We also analyse the methods used to measure these indicators and have already found a lot of inaccuracies, which the ministries are reviewing now. We have determined the measures needed to achieve these indicators and concluded that in many cases, there are not enough of them or they do not sufficiently influence the project’s implementation, including in financing. We have analysed this and provided our recommendations.

For example, it is obvious now that regarding such a project as Safe and High-Quality Roads, many regions –21 regions, according to our estimates – cannot provide the required quality of roads in line with the project’s goals even in six years: the figure stands at 50.9 percent regionally. So 21 regions have not found the necessary measures or financing and see no opportunity to achieve the necessary indicators. This means that additional steps and measures are needed, including possible support.

The same goes for the Housing and Urban Environment projects. Many regions are not ready to say that they can fulfil the tasks that were set. They signed the agreement but believe that something will be added over the six years, that there will be additional opportunities or aid that will make it possible to implement them. We can see these risks.

Other issues include insufficiently detailed planning of the regional programmes related to the implementation of these goals. Originally, it was expected that most of these programmes will be implemented with federal resources, but the regions have to raise large sums of money to create infrastructure for housing and maintenance. Now we can see that even during the first year, the programmes are being implemented on a “fifty-fifty” basis, which means that the regions have to allocate additional resources.

The mobilisation of extra-budgetary funds is lagging behind, and there are not enough incentives to attract extra-budgetary funds. There is not enough risk management analysis. In fact, we do not have this component at all in project management; it is not developed. Some things may not go as planned, but there are special risks we must focus on and work with them in a timely fashion.

The guidelines for the development of the National Projects stipulate that each National Project’s impact on economic growth should be assessed. Yet, none of the National Projects has so far fully met this requirement.

Vladimir Putin: Frankly speaking, this is one of the reasons why we are doing this.

Alexei Kudrin: This job has not been completed yet, and we also pointed this out.

Furthermore, there are two more discrepancies that I would like to mention here. There are work plans for ministries and departments, approved every year for a long period of time, approximately six years. However, the recently approved plans do not include half of the National Projects’ targets. This means that the ministries’ and departments’ routine ongoing work does not always correlate with the National Projects. Some 50 percent of these targets are included in their planned current tasks, but the other half is not.

As regards state programmes – they have their own targets, too. But 75 percent of state programme targets are not included in the current work plans of ministries and departments either. Therefore, there is an imbalance between certain individual planning documents and strategic planning documents.

And finally, about the achievement of the end goals set by the President. Executive Order No. 204 states that the national goals are the main result to be achieved in six years; the National Projects should be adopted and implemented to achieve these national goals. There are twelve such projects, and a 13th document – a comprehensive plan for the development of mainline infrastructure.

Vladimir Putin: So what about the goals then?

Alexei Kudrin: There is no action plan yet. The so-called unified plan for achieving the national goals has been adopted, but it is very sketchy and general and does not even use the terminology of a plan. All it says is that overall, all the actions taken under the National Projects as well as additional activities should ultimately lead to the achievement of the national goals. But there are no specific plans; they are still in the works. I hope that the Government will present the final versions soon, but so far, they are not in place.

It appears that we have already formulated the tasks and documents at the lower level of the National Projects, but the steps to be taken for the achievement of the national goals still have to be identified, and perhaps this will require additional measures.

Therefore, we have identified all the errors or adjustments that need to be made and we have sent proposals to the ministries and agencies. The documents have been sent to the Government, and the ministries are now working on correcting the discrepancies that we have identified.

Vladimir Putin: And what about the implementation of financial plans for the National Projects? There were issues with the funding, amounts, and the money actually reaching the contractors.

Alexei Kudrin: It so happened that most of the National Projects were launched as of January 1. But part of the activities under these projects were not fully agreed on and formulated until the middle of the year. That is why their financing and execution was delayed. Cumulatively, all the National Projects were executed 67 percent as of November 1, while progress on some of them was less than 20 percent by that time.

But we believe the progress is accelerating now. It is true that the funding plans for this year will not be fully implemented. Some projects are faring quite well – progress on some of them reached 89 percent on November 1. But we hope to show a smoother performance next year.

We are looking into the reasons why this happened. The most obvious one is that some of the National Projects were finalised too late, and some investment projects included therein required additional project design and estimation work; also, there are a number of procedures related to tenders, to bidding, which take a long time, sometimes even longer than planned. That is why we have seen a serious under-fulfillment of the National Projects this year.

It is difficult to say now how much of the government allocations will be pending at the end of the year. Maybe more than 100 billion rubles will be unused. Maybe even 200. In federal budget terms, we expect non-execution of federal spending at about 1 trillion rubles. This, of course, is something that never happened before. Last year, it was 770 billion.

Vladimir Putin: I have to say this really is a bit too much.

Alexei Kudrin: Yes, indeed. This is also the Finance Ministry forecast, but on the whole, the State Duma agreed with it while reviewing this year’s budget. This suggests that some procedures are hindered by too much bureaucracy. So we need to think of a way to reduce the bureaucracy and simplify the procedures relating to federal resources.


December 11, 2019, The Kremlin, Moscow