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Vladimir Putin:

Good afternoon.

Today we will examine a series of issues connected with the socio-economic development of the Krasnoyarsk Region. We already examined some of these problems in Krasnoyarsk in March 2002.

We should not only sum up the results of what has been done, but also analyse the situation in the long term, taking into account decisions that have already been taken on restricting powers between levels of power, and also the upcoming changes in the inter-budget process.

The situation here is unique, it is a complex subject of the Federation, and I would be interested to hear once more your opinion, how you assess the decisions already made, and which steps you think should be taken next.

I think that for the Krasnoyarsk Region, this is especially relevant.

It should be noted that over the period since 2000, here, in the Krasnoyarsk Region, certain positive tendencies have been seen. The income of the regional budget has increased, and the deficit has been reduced. At any rate, it was possible to take the budget of the region out of a crisis state. On the whole, tax and budget discipline has significantly increased. A profound analysis has been made of social obligations that are not provided for.

Along with the traditional raw materials industry, there has been an increase in machine building, the food and medical industry, housing construction and small business.

In most industries, investment activity has grown by almost 17%, and investment in primary capital has grown. I would say that many problems have been solved, but of course not all of them.

The growth rates of industrial production are still below the national average – just over 4%. The single-industry structure of the regional economy has not undergone serious change. I have already named the food industry, machine building and so on; but non-ferrous metal enterprises make up over 67% of the industrial production of the region. This is to a large degree oriented towards export. And so, of course, it heavily depends on the state of the international raw-materials market and fluctuations in currency rates.

Another serious problem is the weakness of the energy and transport infrastructure of the region. And this, in its turn, holds up the development of such promising industries as mining and forestry.

I would like to point out right away that the problem of developing these structures is currently under discussion, including energy structures and manufacturing forces. To this end, appropriate plans for developing energy forces should be presented, and there should be serious planning at the Ministry of Economic Development.

Social problems remain a serious issue. Many important indicators of people’s living standards still remain below the average figure for Russia. And so it is no coincidence that there is a chronic tendency for migration flow of the population. This tendency remains.

The labour market is unstable: over the last year the unemployment rate has increased somewhat. There is still a difference between the income of budget workers and production workers, and this difference is quite extreme. Although unemployment has decreased in the country as a whole, it is higher here.

The situation is also complicated by the large number of towns and cities with a single enterprise, and accordingly, a low level of development of the social sphere.

You have established one of the main economic priorities to be the development of processing industries. In the future, this should lead to a diversification of the region’s economy. This should also be helped by the extensive development of small and medium business, and innovative and high technology sectors.

In connection with this, I would like to hear from you what measures would be most effective to seriously improve the investment and business climate. And how work will be organised to demonopolise local markets and to remove barriers at municipal and regional levels. How to make use of the natural advantages of the region – its extensive territory, its rich transit possibilities, the diversity of its natural resources and the qualified staff potential that exists in the region.

And, last of all, there is another fundamental question. This concerns the upcoming introduction of a new model of inter-budget relations, which naturally are very closely linked with what I said earlier.

Today, a clear scheme of action is being established: the amount of authority of each level of power should strictly correspond to the existing financial resources. At the same time, the creation in complex subjects of single centres of accumulation and redistribution of a significant amount of funds should lead, if this is done of course, to an economy of budget resources, and to a reduction in the administrative apparatus. Ultimately, it should lead to the consolidation of a single economic space and tax discipline at all levels.

I want to stress: the fundamental political and legal decisions in the sphere of inter-budgetary relations have already been made. And the main task is now to realise them effectively, competently, and within the set deadlines.

In connection with this, I ask the Government, presidential envoys and representatives of regional and local authorities to keep the current process of inter-budget transformations under strict control. I know that leaders in the regions are not satisfied with the plans made on these issues, and I will be pleased to hear your opinion, your assessments and critical comments on the work that is currently underway. As you realise, it has significance not just for the Krasnoyarsk Region but for all of Russia, for all inter-industry relations. Essentially, it is a very important step towards maintaining a true Federation. A step towards achieving a situation when citizens not only know who they should turn to, but also a situation when we can realise the advantages that exist in Russia, and ensure a high-quality social level. This is all that I wanted to say to begin with, and I think it will be correct if Mr Khloponin continues our discussion. We will listen and then exchange opinions.