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The President instructed the Accounts Chamber to monitor implementation of the Government’s Plan for Guaranteeing Stable Economic Development and Social Stability in 2015, tighten control over the use of funding allocated to Russia’s banking system, and organise ongoing oversight of regional budgets’ implementation.

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President of Russia Vladimir Putin: Colleagues, friends,

Let me begin by congratulating you on your 20^th anniversary. True, it seems that half the people here are not connected to the Accounts Chamber, but I understand that your colleagues and guests have come today, people with whom you work closely on a constant basis and with fruitful results.

I want to thank everyone working for the Accounts Chamber, from the directors to the auditors and regular staff. I thank everyone working over these years for the Accounts Chamber, past or present, for their professionalism, principled approach, firmness, and devotion to their work.

The Accounts Chamber’s responsibilities concern issues that look boring and of little interest at first glance, but that are absolutely crucial for the state’s effective work. This is why the Accounts Chamber has earned deserved influence and respect.

You have thorough and in-depth knowledge of issues concerning the budget. You do not look at rank and titles but uncover oversights and in some cases even obvious violations of the law and financial discipline.

I say this with such confidence because I have first-hand knowledge of your work. As you probably recall, I was at one time head of the Presidential Control Directorate and we worked very closely indeed with the Accounts Chamber.

The Accounts Chamber’s reports contain objective and detailed information on how effectively and with what results public money is being spent, and its carefully balanced and professional conclusions form the basis of important state decisions.

Under the Constitution, our country’s Parliament forms the Accounts Chamber. This guarantees unbiased work in the interests of the entire country and all Russia’s people.

Recent amendments have been made to the law, expanding the Accounts Chamber’s powers, raising its status and strengthening its independence. In particular, the parliamentary parties play a much greater role in the Chamber’s formation now. 

Let me add that we now have new possibilities for closer cooperation with the law enforcement agencies. Information that the Accounts Chamber obtains on misappropriation of state funds and violation of the law should certainly become the basis for and subject of closer investigation.

Colleagues, the current situation requires all state agencies’ active involvement and close cooperation. This was why I noted at the start that many of those present today are not Accounts Chamber employees, but work closely with the Chamber.

Restrictions from abroad have had an impact on a number of our most important economic indicators, and as we all know, not for the best. The Government has put together a plan for guaranteeing stable economic and social development in 2015 and substantial state funds are being allocated to carry it out. I ask the Accounts Chamber to monitor the plan’s implementation.

We must produce clear and tangible results, make specific production sectors more stable, stimulate demand for Russian-made goods, and, let me make it clear, in no case allow state resources and our reserves to be frittered away. We must proceed very carefully. It does not take much brains to simply pour money into various sectors for their ever important needs. This is the simplest thing. But what we need to do is change our economy’s structure. If we make money available, we must do so in areas that will bring about this structural change or put it into supporting the people who really do need the state’s support.

I also ask the Accounts Chamber to tighten control over funds allocated for the banking system. This money should be spent primarily on issuing loans for the most important projects in the economy’s real sector at affordable interest rates. I will not go into the details of the proposed instruments right now. You probably already know the proposals well. But we must make sure that all of the conditions for this money’s allocation and the following steps are met, and this requires special monitoring too.

I remember very clearly, as you no doubt do too, the handful of cases we had back in 2008–2009 when we made funds available for supporting the banking system’s liquidity. Overall, the Government and the Central Bank worked well then, but there were some obvious failures too, some oversights related to what was quite simply ineffective use of the funds. Insufficient monitoring was the cause of this situation.

You should pay particular attention to the situation in the regions. The success of our work in general depends in large part on how work in the regions is organised.

Above all, you need to organise ongoing monitoring of regional budgets’ implementation. This includes the use of federal support funds and the general level of regions’ debt. You need to work closely here with the supervisory and audit agencies in the regions.

I was discussing with [Accounts Chamber Chairperson] Ms Golikova before the need to support monitoring at the municipal level too. The law sets some limitations in this area of course, but without meddling in municipal work, including the monitoring agencies’ work, you can provide them with assistance on the basis of agreements or find some other form, but you must support your colleagues at the municipal level, all the more so as they have no shortage of problems and are always short of money.

We must continue the efforts to address system-wide problems, change our economy’s structure using the proposed measures, and make the social sphere more efficient. These are things we have talked about a lot, but we have made only slow progress so far. For a decade or more now, we have been talking about the need for a system of genuinely targeted support rather than simply spreading the resources around among everyone, even those who have absolutely no need for support. Resources end up going to people who will not even make any use of it, while people who really need support often fail to receive it.

We must not wait for the situation to improve on its own. We must create the conditions for economic growth and make use of all factors. In the current circumstances, we need to look for more effective and original solutions to the tasks that were set out in the [May 2012] Presidential Executive Orders and the latest [Presidential] Address to the Federal Assembly. 

In this context, I think the Accounts Chamber should once again analyse the state programmes and consider to what extent their indicators correspond to our strategic aims, how clearly these programmes’ priorities have been set, and where we can find reserves that could be used for development.

Moving on, you need to continue work to make budget spending more effective. I mentioned this already. We cannot allow wastefulness.

From one year to another, the Accounts Chamber uncovers clear violations of budget discipline and issues the necessary instructions, but we must confess that we have still not seen radical change as yet. 

We see that the bad practice of concentrating the main spending in the final quarter of the year also continues from one year to the next. Spending gets literally crammed into the last weeks of the year. What kind of conscious work and clear results can we talk about with this kind of approach? Ms Golikova should be well acquainted with this situation as she previously worked in the Finance Ministry.

Over the last five years, a third of state spending was carried out in the fourth quarter. Of this, half of it, for various reasons that colleagues have given, was hastily spent in December, following the well-known principle of doing whatever with it so long as you grab it while it’s still there to be had. There are some objective reasons for this situation, of course, of which I am well aware. There are subjective reasons, too. But we cannot just talk about this problem year after year. We must make changes to the rules so as to change the situation.

The current situation should become an additional incentive to finally minimise and hopefully eradicate altogether all of these flaws and violations that we still see cropping up now, unfortunately.

I hope that the Accounts Chamber will monitor particularly closely the measures to strengthen budget discipline and, if necessary, will put forward their proposals, including on changes to the laws and regulations.

Another area I must mention is state procurement, a sector worth trillions of rubles. The Defence Ministry, for example, has already been instructed to tighten control over budget funds allocated for defence procurement. This work is underway now.

We came to an agreement with the Accounts Chamber’s head, and I want to confirm this once again for her now. I ask you all to make the necessary recommendations, through the head, of course. We discussed creditor debt and in this context will make adjustments to financing for the Defence Ministry so as to reduce creditor debt and put state funds to more efficient use. This is the result of your proposals. I ask you not just to conduct inspections and register violations, but also to use your experience and knowledge to draft proposals on how to improve the situation. 

Regarding civilian agencies, the law on the federal contract system came into force a year ago. This law aims at making the procedures more transparent and encouraging real competition between the players in the procurement process so as to achieve more rational use of state funds.

Unfortunately, we are forced to admit that we have yet to see substantial savings of money allocated for public procurement. Going against common sense and the current economic circumstances, some state and municipal agencies continue to buy goods at unreasonably high prices, push Russian producers out of the bidding for contracts, and use state funds to buy luxury goods.

In this situation, I think it would be useful to work more closely with public organisations, including the relevant organisations in the Russian Popular Front. I will say more about this later. They have tackled the problem quite effectively and have brought a lot of issues out into the open. I ask you to support them.

Overall, you should continue to tighten control over use of funds in public procurement by state corporations and companies with state participation, improve the work of the watchdog agencies in the regions, facilitate introduction of modern technology, and establish dialogue with civil society, as I said.

You must coordinate rigorous control over state investment and ensure that investment of state resources produces concrete and effective results. 

But we see cases where large facilities being built with state money are left unfinished for years and particularly flagrant examples when construction costs for standardised buildings vary hugely even between neighbouring regions. This is an area where we could save a lot of budget money, and in the current situation this is very important indeed. I ask you to give this matter your attention.

As you know, we have decided to establish a single technical client system, which will centralise preparation of standardised projects, construction documents and selection of subcontractors. The mechanisms will be tested through pilot projects. I know that there are some potential pitfalls here, and some situations that could cause problems, including corruption-related problems, but it would also be wrong and simply not possible to just leave everything as it was before. Let’s go ahead and put this system into use. But I ask you to follow it very closely, monitor the situation, and, as I said, make your proposals on ways to improve it. I ask the Accounts Chamber to ensure monitoring of this decision’s implementation. 

Colleagues,

Our country has faced many challenges over these last years, and we have always come through the difficult moments in our development with dignity. I am sure that it will be the case this time, too.

You must pull together and set your minds on quality, initiative-taking and fruitful work and put our full energy into it. Of course, you must work openly, as I said, in dialogue and cooperation with civil society. Only this way will we be able to achieve the positive changes we need so much.

Let me conclude by once more congratulating the Accounts Chamber on its anniversary and wishing you every success.

Thank you very much.

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