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President of Russia Dmitry Medvedev: Dear Colleagues!

We are gathered today in a working meeting to discuss the current situation in the Russian financial market. We understand what this situation is linked to. Today the international financial system is undergoing what is perhaps its most difficult period of the past decade. No one doubts this anymore. And today it is obvious to everyone that the crisis in global financial forums has proven much deeper than even the most pessimistic preliminary forecasts.

The integration of our economies into the global economy, including the global financial system, is a product of our conscious choice. And our economic growth in recent years was the result of this choice among other things. In the last few days, many events have occurred in international markets. You know what serious problems arose yesterday in the financial market of the United States of America. U.S. authorities are taking unprecedented steps to remedy the situation. In fact, they have undertaken even a partial nationalization of their financial sector.

In this regard, I repeat what I said some time ago: we have sufficient reserves, we have a strong economy, and these factors guarantee that no shocks will occur. I would like to draw particular attention to the fact that in this situation the ultimate priority of the Russian authorities consists in maintaining the stability of our financial system. This is now our ultimate priority. We do not have the slightest doubt concerning the importance of the financial sector for the economy and for banks, and public markets will be closely scrutinised by all of us here. We are ready to take corresponding measures, measures adapted to the current situation to ensure the normal functioning of financial institutions. At the same time we have a full set of tools at our disposal to address problems that might arise. The government actively and — what is most important — in a timely fashion keeps track of developments and is ready to respond rapidly to circumstances that arise. I am confident that the market will receive all necessary support. Some measures have already been taken by the Central Bank of Russia and the cabinet. I would like you to report on the additional measures that have been taken to ensure stability in the banking sector, the financial markets, and ultimately stability in the economy as a whole.

First of all the Minister of Finance. Please go ahead, Alexei Leonidovich.

Minister of Finance Alexei Kudrin: Dmitry Anatolyevich, in the last few days stock markets have continued to fall in the United States and elsewhere and this has affected the decline in the Russian stock market. The largest U.S. investment banks and those of other countries are experiencing shortages of liquidity. This affects Russian banks who can provide less credit and, in fact, the lending that Russian banks do abroad has virtually ceased. Foreign banks are trying to mobilize some funds, including funds from our market.

In addition, the change in oil prices is affecting the Russian market today. For that reason maintaining liquidity in the financial sector and the settlement and normalisation of trading on the stock market require a number of measures. I will enumerate these measures.

First and foremost, the Ministry of Finance decided to increase the limit for placing temporary funds of the Federal Treasury in the deposits of commercial banks. Yesterday, we increased the limit to 1 trillion 514 billion rubles. We also allocated a significant amount of these funds for three major banks: Sberbank, Vneshtorgbank and Gazprombank because those banks bear most of the burden for supporting interbank loans and participating in stock exchanges.

This week we have already held two auctions for placing Treasury funds. One auction related to the distribution of 150 billion rubles over the next five weeks and the second auction to the distribution of 118 billion rubles over a week. Tomorrow there will be another extraordinary auction for the deployment of funds of up to 200 billion rubles over a week. But we think that, as before, not all of these funds will be required. Our task is to offer funds to banks, and banks will take as much as they need. I even expect that less funds will be required in light of the actions that the Central Bank has taken in the market.

On Monday the first auction, one of our instruments for distributing three months of funds among the three leading banks, will take place. I repeat that we are expecting these banks to support loans to small and medium-sized banks and to support operations in the stock market, and we have held consultations with them about this.

We have also decided that these three banks — Sberbank, VTB and Gazprombank — will allocate an additional 60 billion rubles for lending to stock market participants in exchange for securities, something which will also provide liquidity and stabilise exchanges. Today traders are realigning their settlements and mutual debts on the markets. Therefore, together with the participants of the stock market and authorised agencies, today we took the decision to conclude this process of realignment and settling of debt by providing additional funding for the leading three banks, and we will reopen the Russian stock market as of tomorrow. In addition, the cabinet will prepare amendments to this year’s budget and allocate 60 billion rubles to the capital of the Agency for Mortgage and Housing Credit designed to refinance the mortgage loans of commercial banks. This will raise the liquidity of banks’ assets and especially those of banks that work primarily in the housing market.

In addition, this week the cabinet will reduce the export duties on crude oil and petroleum products as of 1 October 2008, based on the average price measured between the 1st and the 17th of September. We are thus deviating slightly from the rule that we have followed in recent times, and setting export duties based not on the monitoring of the past two months, but on the monitoring of the past 17 days, from the 1st to the 17th of September. Accordingly, the duty will be 372 USD instead of the normal fee. Calculated differently it would have amounted to 485,80 USD per tonne. This measure will allow oil companies and oil processing companies to save a total amount of 5.5 billion dollars. Of these, 4.5 billion dollars will go to oil companies and a billion dollars to oil processing companies.

Thus, these measures will allow us to distribute funds to those places which today are witnessing a fundamental strain on liquidity and, taking into account the actions of the Central Bank, we believe that we will ensure the normal operation of the financial market.

Dmitry Medvedev: I support the measures that you have enumerated. I would like you to determine the amount of additional support that the Russia’s major banks require in the next two days.

In addition, I suggest that the cabinet examine the possibility of allocating up to half a trillion rubles — 500 billion rubles — for the stabilisation of the stock market, including 250 billion rubles to be reserved directly in the budget. This must also be done immediately.

I now call on the Chairman of the Central Bank of Russia. Please go ahead, Sergei Mikhailovich.

Chairman of Russia’S Central Bank Sergei Ignatyev: Thank you Dmitry Anatolyevich.

Yesterday, at a meeting of the Board of Directors of the Central Bank, we made a number of important policy decisions. First of all, we decided on a temporary but very important lowering of mandatory-reserve requirements. As a result, tomorrow, on Friday, commercial banks can obtain about 300 billion rubles on their correspondent accounts. I would like to stress that this measure applies to all banks without exception and, in my view, this is very important.

In addition, we decided to lower interest rates on a number of tools designed to provide liquidity by 0.5 per cent, and even by one per cent. Moreover, we made a number of other decisions aimed at stabilizing the situation in the banking sector. We continue to monitor the situation closely and are ready to take further steps if need be.

Dmitry Medvedev: Then I suggest that the Central Bank continue its ongoing, constant monitoring of the situation. Report your evaluations of the situation and proposals daily if necessary.

Sergei Ignatyev: Fine.

Dmitry Medvedev: I would like to say one more thing. The list which has just been enumerated is, at the moment, both necessary and sufficient, but it may be supplemented if we perceive an additional need. Today the Russian authorities have enough resources to ensure stability in the financial sector. Let us think about further steps to take in this direction.

Thank you.