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Minister of Economic Development and Trade (MEDT) Elvira Nabiullina on an increase in industrial production in February

Elvira Nabiullina: Data for the industrial sector in February show reasonably sustained growth in industrial production. If we compare February this year with February last year, industrial production increased by 7.6 percent, the manufacturing sector by 11.2 percent.

If you compare February with January of this year, growth in industrial production was 1 percent, and 1.7 percent in the manufacturing sector. That is, in general, the data show that steady growth in the manufacturing sector continues.

Such growth is primarily the result of last year’s investment policy. We had a fairly big increase in investment in the manufacturing sector, and the impact is already being felt this year.

Deputy Prime Minister Aleksandr Zhukov on the establishment of a government commission on small and medium businesses

Aleksandr Zhukov: We decided to establish such a commission because the issue is complex and requires joint efforts, not only of various ministries but also social organizations of small and medium-sized businesses. It will also involve regional leaders, since the development of small and medium business requires combined efforts at all levels — federal, regional and local. But first of all the main areas of activity will be reducing administrative barriers, finance and loan support for small and medium businesses and aggressive joint efforts with social organisations and with the regions.

The Commission will be created soon.

Deputy Prime Minister Sergei Ivanov on the meeting in Tula concerning the development of defence industry

Sergei Ivanov: On Friday, I plan to commit a one-day working visit to Tula, the heart of Russian weaponry production. The trip will be devoted to the development of our defence industry. On the basis of federal state unitary enterprise Instrument-Making Design Bureau we will consider the development and serial production of anti-aircraft missile complex Armor. It was presented at the International Aviation and Space Salon MAKS-2007. The question now involves the mass production of this latest weapons systems.

In addition, in Tula I plan to participate in the opening of a major sports and recreation complex for children and youths, paid for by the New Generation Foundation. There is a lack of sports facilities in Tula, particularly in working people’s districts. The Foundation is taking care of it.

Deputy Prime Minister and Finance Minister Alexei Kudrin on budgeting for higher wages in the regions and on the momentum of the macroeconomy

Alexei Kudrin: Basically, the wages in the regions of the Russian Federation were increased by 14 per cent on 1 February. Today, 76 regions have opted for this, and the wages have been paid. Another three will take this step in the next couple of weeks and four did so in advance, in January or even in October.

We have developed with the regions of the Russian Federation the principles of an agreement with the government concerning possible support in the event that the regions do not have enough of their own funds. For the wage increase we took into account the macroeconomic improvement and it is already reflected in the federal budget. The same work is being carried out in the regions of the Russian Federation. They will determine the additional revenues that will be used for this purpose. We expect that most of the regions will handle this matter themselves. Some of them may require assistance, maybe ten. In the federal budget, we have set aside reserves for such support — 16 billion rubles. But we will know only in the second half of the year or at the end of it how much of that will be needed, how many regions will lack sufficient funds.

In January, regional incomes in the Russian Federation were up 34 percent compared to January of last year. In absolute terms the amount was 64 billion rubles. That represents a steady, sustained growth of income, which reflects the positive momentum of the economy. The growth rate of revenue sources such as taxes on profits and income tax is running ahead of inflation.

The forecasts that we prepared for this year in conjunction with the Ministry of Economic Development and which were taken into account in budget amendments in February show that the overall macroeconomic momentum and basic monetary aggregates will enable us to cope with the task of reducing inflation.

However, there are some trends that we could not fully take into account and which are now beginning to emerge. First of all, the much higher than anticipated rise in the price of oil has significantly increased trade surpluses. That is, Russia is once again receiving a large amount of petrodollars, which of course the Central Bank buys up to curb the strengthening of our national currency. Petrodollars have become a new source of money supply in the markets. The cumulative increase in the money supply for the year since 1 February 2007 is 48 per cent, which is a very big increase. This is another factor that could increase the inflationary trend. Of course budgetary expenditures themselves are not such a factor, but other factors that were not taken into account in drawing up the budget could be …

Russian President Vladimir Putin: I am asking you, together with the Central Bank and MEDT [the Ministry of Economic Development and Trade], to monitor closely the progress of the ruble, as you mentioned. We see what is happening in the euro zone, and how the rise of the euro is affecting the European economy. We need to watch this very carefully.