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Meeting with Government members

February 5, 2020, The Kremlin, Moscow

Vladimir Putin held a meeting with Government members.

President of Russia Vladimir Putin: Good afternoon, colleagues.

Before we start, I would like to listen to what Ms Golikova has to say about the measures taken by the Government and all of us to curb the threats linked with the spreading coronavirus.

Go ahead, please.

Deputy Prime Minister Tatyana Golikova: Mr President, collegues,

First of all, I would like to thank you, Mr President, for your decision on the evacuation of our citizens from the city of Wuhan in Hubei Province. I would also like to thank the Aerospace Forces of the Defence Ministry, border guards, customs officers and transport workers, the Federal National Guard Service, epidemiologists and, of course, the leaders and government of Tyumen Region for their efforts. I would like to emphasise once again that the evacuation of our citizens from the city of Wuhan in Hubei Province is a humanitarian gesture. We do not abandon our people. I think it is very important for every Russian citizen to take this attitude.

Now I would like to update you on the current developments. A total of 24,500 cases of the virus are on record in the world. Understandably, the majority of them are in the People’s Republic of China, and 229 cases have been detected in other countries. As of today, as before, only two cases have been detected in Russia. There are no new cases. The Government is doing all it possibly can to prevent the spread of the coronavirus. Mr Mishustin signed a national plan to counter the its spread. It consists of 22 measures and is aimed at responding to any situation that may take shape.

I have a few words to say about the most recent decisions. We have suspended the issuance of group and work visas to Chinese nationals. Traffic across the Russian-Chinese and Russian-Mongolian borders has been suspended as well. According to operational headquarters’ decisions, air service with China was significantly limited as of February 1, and regular flights are carried out only to and from Sheremetyevo Airport. A ban on foreign nationals’ transit flights from China was introduced on February 4. The number of charter flights is down. Today, there will be only two, and starting February 14, we plan to stop charter flights altogether to ensure domestic security. Everyone has been notified. Rospotrebnadzor [Federal Service for Supervision of Consumer Rights Protection and Human Well-Being] is taking the necessary measures at the checkpoints to identify people with acute respiratory disease.

I want to spend a moment to discuss already known information. Today, two planes arrived in Tyumen Region from Wuhan and Hubei Province with 144 individuals, including 128 citizens of the Russian Federation and 16 citizens of the Commonwealth of Independent States, specifically 10 people from Belarus, one person from Armenia, three people from Kazakhstan and one person from Tajikistan. All of them were taken to the Tyumen Gradostroitel Treatment and Rehabilitation Centre and tested for coronavirus. They will spend the next 14 days there. No one is sick.

I want to emphasise once again that these citizens are quite healthy, and the staff working with them will also be isolated and remain at the centre. Should there be any symptoms, the patients will be committed to the Tyumen Infectious Disease Hospital for individual supervision and treatment. Like any other infectious disease hospital, this hospital is properly equipped to provide all kinds of medical aid to people with viral diseases, including an intensive care infections department. Coronavirus pneumonia is treated just like any other pneumonia. The staff constantly provides aid to such patients and is sufficiently experienced in providing this kind of treatment.

I would also like to say that there is a cruise ship in Yokohama, Japan, which has passengers affected by the coronavirus. Thankfully, they are not Russian citizens. There are 24 Russian citizens on the ship. The operational headquarters, the embassy and the Foreign Ministry maintain contact with our citizens. We are on top of the situation.

In addition, I would like to say that today six experts from Rospotrebnadzor and the Ministry of Healthcare arrived in China to discuss the coronavirus with their colleagues, to get an update and to see what else can be done to protect our citizens.

Also, in accordance with the instructions issued by the operational headquarters and the Prime Minister and as coordinated with China, a list of personal protective items to be sent to China as humanitarian aid has been drawn up. The Foreign Ministry has agreed on the details with them. The cargo is being prepared for shipment.

In closing, I would like to say a few words about the situation in our country. Unfortunately, we saw one pharmacy chain raise prices of medicines and personal protective items. Some pharmacies raised the price of one facemask to 70–100 rubles. Before the New Year, one mask was only 1.5 rubles. This is an unprecedented price hike, and we will hear what the Federal Antimonopoly Service has to say about the effort to mitigate this situation at the next meeting of the operational headquarters. All instructions have been issued.

Vladimir Putin: They need to lose their license for this, that is all. They decided to make money off this. We need to identify who the decision maker is in every company so they do not feel like doing this again, that is all.

Tatyana Golikova: All right.

I would also like to say that on February 4 Roszdravnadzor [Federal Service for Surveillance in Healthcare] opened a hotline at our instruction. Anyone can call for information on price gouging in pharmacies.

Once again, I would like to thank you and all my colleagues who are dealing with this. The situation is under control.

Vladimir Putin: Our network of pharmacies is fairly large, maybe even too large. So if two or three pharmacies are shut down there will be no negative consequences for people who need medications. But we need to respond appropriately to this.

Thank you very much for the information.


We are holding our first meeting since the Address to the Federal Assembly was made public. The new Government has been formed and all organisational issues resolved. Now it is important for us to quickly step up our efforts in all areas. As a reminder, our main task is to achieve steady growth in real salaries, wages and income and consistent improvement of living standards. The entire Government must focus on this goal. This should not be divided into financial-economic, social or sectoral blocs. This has to be collaborative work, a team effort aimed at the final result. It is necessary to concentrate our efforts on our economic, social and educational policies and on the development of the infrastructure.

I would like to emphasise that it is necessary to upgrade the performance of the cabinet with a view to implementing the items in the Address I mentioned and the May Executive Orders in a timely manner and in full. I would like to add an important point: the overwhelming majority of specific measures and initiatives are carried out at the regional and municipal levels. Therefore, you need to be in direct and close contact with your colleagues at this management level and work directly with non-profit organisations, with the people and the regions of the Federation. I am hoping that, in cooperation with the regional management teams, the Government will use the most effective mechanisms in reaching our national development goals.

I will add a few words in the same vein. I know that you are already seriously streamlining administrative procedures and have expedited the introduction of advanced digital technology in the activities of the ministries and departments. Mr Mishustin told be about this just yesterday evening. It is important to make this work more effective in every area, speed up the processing of documents and management decisions and use funding rationally. These changes should be felt primarily by our people, families and by business. They should feel that it is much easier and more convenient to receive government or municipal support, services, and social benefits and to open a new business.

In a word, I expect you to make a breakthrough in eliminating red tape across the board. This would earn the confidence of our people. This will generally expedite and improve the quality of work on the national projects and development goals.

I ask the Government to promptly draft and adopt the necessary legislation and arrange the work locally. First of all, this concerns payments to families with children aged 3 to 7, which was mentioned in my Address [to the Federal Assembly]. You will remember that we agreed to start the countdown for these payments on January 1. All formalities must be promptly sorted out so that people can apply for these payments immediately, including remotely.

I am expecting the same precision in the implementation of decisions on the upgraded maternity capital programme, arranging hot meals for junior schoolchildren and other initiatives mentioned in the Address to the Federal Assembly.

Let us start.

Mr Mishustin, please.

Prime Minister Mikhail Mishustin: Mr President, colleagues,

The Government has already started addressing the tasks you set out in your Address to the Federal Assembly, Mr President.

At the previous Cabinet meeting, we discussed ways to organise this work in the most efficient way and accordingly, made a list of relevant instructions with exact schedules and responsible persons at the level of ministries and agencies. Deputy Prime Ministers are also personally accountable in their fields.

Mr President, all Government members are committed to carrying out all your instructions in full and are aware of the significance of the tasks we are facing. We realise that obvious and concrete results must be achieved in the shortest possible time; the priorities are, as you have said, economic growth, improving the demographic situation and increasing the incomes of the population. In other words, our priority is to give people confidence in tomorrow.

A considerable number of instructions refer to the social sphere, primarily demographics and support for families with children, including extending the maternity capital programme until December 31, 2026, and increasing the amount and future maternity capital payments. To comply with your instructions, legislative amendments must be submitted before April 15, and we are on schedule.

The decisions on the social sphere expressed in the Address are comparable in terms of their scope to the national projects adopted earlier. Work on improving the demographic situation aims to achieve two national goals you laid out, which are increasing life expectancy and natural population growth.

Deputy Prime Minister Tatyana Golikova will report in greater detail on organising work in the social sphere, including drafting respective legislative amendments and the financial support of the decisions you made. In practical terms, we have reserved respective funds and coordinated them with the Finance Ministry.

The second group of issues relates to economic development.

One of the national goals is entering the world’s top five economies. And of course, the key task set forth in the economic part of the Address is increasing investment activities, launching a new investment cycle while maintaining macroeconomic stability and low inflation rates in the first place.

First Deputy Prime Minister Andrei Belousov will speak in more detail about the tools the Government plans to use to achieve this objective. I will name several important measures that we expect will allow us to achieve a GDP growth rate increase by the end of this year.

First, we need to encourage consumer spending by introducing the package of social support measures that you spoke about in your Address [to the Federal Assembly].

Next, we need to increase demand for domestically produced machinery and equipment under the national projects and the import substitution programmes, which we plan to continue. Another measure is increasing the export of goods other than raw materials and energy. We plan to finalise and approve, as soon as possible, a draft law on safeguarding and encouraging investment to make sure that the terms and conditions of major investment projects do not change during the implementation of these projects. And we will monitor how well state companies deliver on their investment programmes.

We will also move faster to implement our plan for changing the business environment, along with the so-called technology package, which mainly refers to the digital economy, something you just mentioned. This is about, among other things, linking investment to advanced technologies.

All these measures will be funded in full. The Finance Ministry has been instructed to address the funding issues without delay and, accordingly, to draft amendments to the federal budget. We plan to consider all these amendments at the Government meeting next week and this, along with the agreed on budget funding, will allow us to enhance social support for our citizens and provide impetus to economic growth.

Vladimir Putin: Thank you very much.

(Next, Tatyana Golikova reported on the measures to carry out a number of instructions regarding social support that the President gave in his Address to the Federal Assembly.)

Mr Belousov, please.

Deputy Prime Minister Andrei Belousov: Thank you.

Mr Putin, Mr Mishustin, colleagues,

The key objective for the economy as set forth in the Presidential Address is to launch an investment cycle. This objective has clearly fixed quantitative parameters. In the first three quarters of last year, investment edged up 0.7 percent, whereas this year this figure should be 5 percent and in 2021, at least 6 percent and later it should remain at roughly this level. Only given this growth curve, i.e., when investment grows at approximately twice the rate of the GDP, the size of investment in 2024 will reach the target figure – 25 percent of the GDP – set by the President. This is the benchmark for the Government when planning measures to be carried out in this area.

What specifically needs to be done to resolve this challenging task? As a matter of principle, we need to address three main questions: faster market growth, lower risk for investors, and the availability and cost of long-term money.

I will begin with markets. Today, one of the main factors that hamper investment growth is overall market stagnation. Clearly, nobody is likely to invest much money in stagnant markets. The Government has at least three powerful tools that can encourage consumer demand – Mr Mishustin spoke briefly about them.

The first is increasing current consumer spending through the package of social measures set forth in the Presidential Address. As for the consumer spending part of the package – because it also includes an investment part – that is, without counting investment, this year consumer spending is planned to increase by almost 185 billion rubles, next year by almost 400 billion rubles and then over 400 billion rubles every year. Families in Russia will largely use these funds to buy goods and services, that is, to buy products from the food industry, agriculture, the textile industry and so on. This factor alone will account for a growth of about 1 percent in retail trade, or, accordingly, a growth of approximately 0.3 percent in the GDP.

The second lever is additional demand for domestic machines and equipment during the implementation of national projects. Let me remind you that from 2015 to 2019, over 2 trillion rubles were spent in import substitution projects from all sources in industry alone. This funding produced fairly tangible results in the creation of a domestic production and technological foundation. In perspective, the main reserve of import substitution lies in the purchasing of Russian equipment under national projects. Expenditures for machines and equipment exceed 6 trillion rubles. About half of it, 3.2 trillion rubles can and must be spent on Russian equipment manufacturing products, including 1.4 trillion rubles on defence industry diversification. Mr Putin, these figures have been confirmed by the Ministry of Industry and Trade and are fixed in your instructions. You have given tough directions to those who oversee these projects. We will carry them out.

Therefore, additional demand for Russian equipment will total almost 500 billion rubles this year, 556 billion rubles next year and over 600 billion rubles later. This is a 3.5–4 percent increase in the entire domestic equipment manufacturing market that adds up to about 14 trillion.

The third lever is increasing the export of goods other than raw materials and energy. Based on the planned support measures for exports under the national project of the same name, the increase in industry alone should amount to about $6 billion or plus 390 billion rubles at the current exchange rate. Next year this figure will be $14 billion or almost a trillion rubles. This is additional demand for produce of the metallurgical, forestry, chemical and pharmaceutical and civilian machine-building sectors.

Altogether, the above factors will produce up to 1 percent of additional growth in the GDP this year and a 1.6–1.7 percent increase next year. We believe this is quite enough to warm up the markets in a neat and gradual way and achieve a 3 percent increase in the GDP as soon as in 2021.

However, these plans will be accompanied by a serious injection of liquidity in the economy. The Government and the Bank of Russia will have to work together with precision to not upset the macroeconomic equilibrium and prevent the growth of inflation.

Mr Putin, we have agreed with the Bank of Russia, with Elvira Nabiullina – this is a counter initiative – to create a permanent online mechanism of consultations on evaluating the situation that is taking shape, and, if need be, for adopting measures independently in our competences.

Now I would like to say a few words about two other areas: investment acceleration, risk reduction for investors and the availability and cost of long-term money.

As mentioned, the first area is the adoption of a law on protecting and encouraging capital investment, which will guarantee predictable rules for implementing large investment projects, the so-called stabilisation clause. Many discussions were held here. Yesterday Government members agreed – I hope finally agreed – to delete the most disputed points and adopt the law sooner. You fixed a date of April 30, but we will try to do this earlier.

Passing a law is not enough; it must also be made effective. A working group to assist the implementation of new investment projects has been established jointly with the Russian Union of Industrialists and Entrepreneurs. It has received 196 applications, 15 of which, worth nearly 3 trillion rubles altogether, have been examined by VEB and the Russian Direct Investment Fund. We plan to add momentum to the group’s work, focusing on two priorities: first, stimulating a higher degree of conversion and the creation of new jobs, and second, a positive influence on the implementation of national projects.

Our second objective is to accelerate the implementation of roadmaps as part of the efforts to transform the business climate. The National Business Initiative 2.0 comprises 229 events divided into 15 practical plans for liberalising the business environment. Our priority is to lift the regulatory barriers that are of the biggest concern for investors and are hindering the development of new activities. These include the protection of property rights, bankruptcy laws, the improvement of arbitration courts, transition to a risk-focused regulatory approach, as well as the regulation of the intellectual property market and several other spheres.

Most of our plans have been coordinated with business associations, but are stalled because of a lack of coordination between departments. The headquarters for guiding these activities has been established at the Economic Development Ministry. We will meet on a weekly basis to defuse this situation. We also plan to maintain dialogue with business associations while doing this.

Thirdly, we will introduce investment tax deductions in the regions, with up to two-thirds of deductions to be covered by federal allocations. You have set the deadline, July 1. These allocations have been stipulated in the amendments to the budget at 30 billion rubles annually, so far. We are working out the rules now.

What is this all about? It will be a new mechanism; the regions will independently apply these tax deductions, just as they are doing now, but the allocation of compensations is conditional on three things.

First, the volume of the project will be limited by the above authorities, so that priority attention is given to small and medium-sized businesses.

Second, key institutions ensuring investor comfort and protection, the so-called investment standard, must be created in the regions.

Third, the region must have a portfolio of projects within the framework of the regions’ specifics. In other words, we plan to create a system for involving the regions in the investment process, including the sharing of best practices and the training of regional administrations. We will make use of the Centre for Investment Promotion established at the Russian Direct Investment Fund, as well as the State Council’s working groups.

Fourth, the National Wealth Fund should be used for the additional funding of infrastructure projects on condition of repayment. The NWF has over 7.8 trillion rubles or nearly 8 trillion rubles now. This sum approximately equals the margin of safety approved at 7 percent of GDP. According to assessments, which have been coordinated with the Bank of Russia, the annual inflation-safe investment of NWF funds in the economy is estimated at some 300 billion rubles. We also believe that there must be at least four rubles of private money for each ruble allocated by the NWF.

Mr Putin, you issued instructions that a list of transport infrastructure projects be compiled before June 1 to include, among other things, motorways linking regional centres, slip roads to federal roads and city bypasses. The Ministry of Transport has drawn up rough proposals for this list, which include 62 projects with an estimated cost of slightly over two trillion rubles. We will enlist the help of the State Council’s working group and will finalise them. We are planning to obtain the results and finish off the job within the set timeframe.

Fifth, working with state-run companies according to their investment programmes. They account for nearly 25 percent of all the investment in the country. In effect, they are companies with Russian government shareholdings. At the same time, there are state-run ones that are not only reluctant to build up their investments but also regularly reduce them. We understand that there are corporate investment cycles, development priorities and the budget requirement for dividends, but the goal of speeding up investment must be the same for everybody, not for the Government alone.

We are planning to step up the work in this sector, including by analysing the spending of investment funds through participation in boards of directors. We certainly will not interfere with the companies’ development interests or with any other interests, including those of minority shareholders. But, Mr Putin, we will particularly need the President’s support when it comes to this.

Sixth, the longer-term funding and financial instruments for investment. Here we prioritise large-scale project financing, including for the Project Financing Factory created by VEB and the development of the corporate bond market, particularly venture capital financing oriented to investing in hi-tech companies. On this point, there is your instruction to securitise investments of this kind, given the specific risks and uncertainty involved in the implementation of breakthrough hi-tech projects. The deadline is June 1, and we will manage to meet this date. We support the initiative of the Russian Union of Industrialists and Entrepreneurs to create a private venture fund of funds and private venture companies to the tune of approximately ten billion rubles. We are considering at the moment how to support them. This is private money, and the initiative comes from our colleagues themselves.

We have arranged with the Central Bank to establish a working group that will be in charge of developing the financial sector so as to be able to accelerate economic growth and give businesses wider access to financial market instruments. The Central Bank will regulate this process, while our job will be to analyse and see how these instruments can be used in industry and other economic sectors. We are planning to collaborate closely with Vnesheconombank, Sberbank, Vneshtorgbank, and major private banks.

And, finally, seventh, the technological content of investments. Let me note the approval of the so-called technological package of laws related, for the most part, as I mentioned already, to the digital economy. This year, we must adopt ten key laws, seven of which have been passed on from last year, when they failed to be approved. As regards two of these – on experimental legal regimes, or the so-called sandboxes, and on regulating the turnover of large amounts of data – the Presidential Address contains instructions that they should be approved during the spring session. We will implement it.

Finally, the national technological initiative: today, it includes seven working roadmaps on the most important technological spheres of focus; another five roadmaps are being drafted.

The National Technological Initiative community is our main resource with a 50,000-strong core group and about 900,000 people involved in its activities. There are study groups for schoolchildren and university students and dedicated educational resources. In modern parlance, this is an established ecosystem with a vast development potential.

This year, we are starting to implement roadmaps for end-to-end technologies developed as part of the Government’s agreement with major companies, such as Rostec, Rosatom, Russian Railways, Rostelecom, Sberbank and Rosseti. We plan on making the presidium of the commission for modernising Russia’s economy and innovative development the headquarters of these activities and, of course, to enlist the Government digital bloc.

Mr President, launching the investment cycle is a fairly complex, but doable endeavour. The previous Government led by Mr Medvedev has created a solid foundation for this. We are aware of what needs to be done and we know we can do it.

Thank you.

Vladimir Putin: Thank you.

Colleagues, does anyone want to add anything?

By the way, I have a question. What is the upper investment limit for the support measure?

Andrei Belousov: Are you speaking of investment deduction? We are working on it. But we will make sure we do not repeat the situation where 30 billion of deduction went to a respected company that is implementing a major project in one of our regions. In accordance with these rules, we will have to take funds from the budget to automatically compensate 20 billion from this amount. We need to launch an investment process rather than finance individual projects. To do this, we have the law on protecting and encouraging investment. A system for supporting these projects has already been created.

Vladimir Putin: But you also mentioned a limit to encourage medium-sized businesses.

Andrei Belousov: I would rather not give any numbers right now. We are discussing them with the Finance Ministry.

Vladimir Putin: That is fine. Let me know what you decide then.

Andrei Belousov: Absolutely.

Vladimir Putin: In closing, I would like to say that Ms Golikova and Mr Belousov have outlined a vast amount of work lying ahead of us. If everyone present here had had the chance to speak, they would have pointed out even more about their respective industries. This is an ambitious endeavour. It is critically important, because we will not have another chance to concentrate that much money to achieve national development goals in the coming years, or maybe even decades to come. Therefore, the quality of work and timely decisions and, importantly, their implementation and getting results, which, as I have mentioned many times, is all about a healthy economy and social well-being of our citizens, are important if we want to be successful.

I think the Government is as good as it gets. It includes the people who drafted these decisions during at least the previous 18 months and worked on drafting national development goals and on the tools to achieve them in the form of national projects. There are people who did not work in the Government before, but were actually involved, one way or another, in this work in their previous positions. Therefore, I believe that the Government does not have a single moment to warm up to the task at hand. We just do not have any right not to start working on it straight away. There is no way to pretend that someone is not aware of something. Everyone knows everything, everyone is committed, I believe, and everyone is up to speed. So, I expect you to do your concrete work in each of the spheres we just discussed and even those which may not have been mentioned yet, but which we all know about.

I wish all of us every success.

Thank you.

February 5, 2020, The Kremlin, Moscow