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Vladimir Putin: Good afternoon, dear colleagues!

Prime Minister Viktor Zubkov has already done some summarising at this year’s last Government meeting. Allow me, too, to say a few words concluding our work in 2007.

The outgoing year has been successful, and there are statistics to prove this point. It was good for our economy. The gross domestic product increased by 7.6% – impressive even for the last years, and exceeded the aggregate index for 2004–2007 by more than a third.

The national financial system has also proved its stability. The federal budget surplus is at 3.6% of the GDP, minus 640 billion roubles allocated for development.

The real incomes of the population have risen by more than 10% – real incomes, mind you! As you know, we shall again raise pensions and wages next year.

The share of people with incomes below the poverty line is shrinking as before, and will comprise 12–13% of the population at the end of the year – as compared to 15% in 2006. On the whole, we are keeping within the framework of our anti-poverty programme. I am glad to say that we are steadily implementing it.

It was customary in the last years to ascribe the Russian economic success to nothing but the lucrative foreign economic situation. Today, we no longer depend on large profits from oil and natural gas exports alone. Many economic branches and Russian business in general are performing better than before.

We have attracted 20% more investments. Direct foreign investments made up 3.3% of the GDP, as compared to 2.7% in 2006. The present amount makes Russia one of the most investment-attractive countries in the world.

Our work to diversify and modernise the economy is also fruitful. The engineering industry is making more rapid progress than before. The production of machinery and equipment has increased by a record-setting 20%, and of transport vehicles by 15%, while the growth of machine-building output was a mere 3.3% in 2006. However, this industry has ample problems and disparities. The Government has much more to do to enhance the incentives of engineering development. The industry is making much smaller profits than other fields of services. It does not promise us sustainable development unless the situation changes within a few years.

The output is increasing in the chemical, timber, pulp-and-paper and construction material industries. Housing construction for 11 months exceeded that for the same period of 2006 by almost 30%. This was an impressive achievement. The agro-industrial complex has also increased its production.

Dear colleagues!

The economic potential we have amassed must be used to make Russia more competitive in the world. First of all, we must concentrate on the growth of technological and innovative activities. We have much to do in the development of the transport and energy infrastructures in the coming year. The institutions for development and state corporations established in 2007 must demonstrate practical achievements in implementing the available projects or show how they are launching new ones.

As I see it, slowing inflation is among the most urgent objectives for 2008. We have discussed the problem on many occasions and we can only regret that we have failed to hit the targets set for 2007. This is not only the Finance Ministry’s fault. The ministry called to economise and curb certain processes. We can also lay the blame on the global and national economic situation. Specialists think that the world is entering an era of expensive foodstuffs and energy. So it is all the more important not merely to curb prices—we shall not achieve our goal through this alone. We must also develop our own agricultural production. If it is modern and rests on the latest technologies, everything produced in Russia cannot cost more than imported foodstuffs which we bring into Russia in huge quantities. It will surely be cheaper and of better quality. But this cause needs investment. We must help the countryside gain a firm footing—just as we have been doing on our national projects within the preceding two years or so. We should think of how to organise further work.

The development of the Russian banking system and financial markets also remains among our top priorities. The current economic restructuring will demand ever more cutting-edge financial services.

Raising public living standards will be among our crucial goals next year. I repeat that this job demands permanent and persevering expert efforts and effective cooperation with parliament. It is the most urgent to guarantee the increase of labour remuneration in the budget-dependent sphere since February 1, 2008. We have talked about it before.

Military salaries must increase and military pensions be recalculated also starting on February 1.

Russia has declared 2008 the Year of the Family. It must provide new incentives and instruments to implement our demographic strategies.

Last but not least, the entire state machinery must operate reliably and effectively during the presidential election. It mostly concerns the Government of the Russian Federation. So Mr Zubkov must guarantee performance intense enough for all to heave a sigh of relief even if I become Prime Minister. The Government must work efficiently and dynamically, and be aloof to any domestic political events, even such crucial ones as the presidential election. I want to stress that we are working for our nation, for our people, and we must guarantee them normal life.

The New Year is close at hand. I use this occasion to thank all Government members and the entire Government staff for effective and successful work. I wish you and your families every success and the best of health in the coming year. Thank you.