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President of Russia Dmitry Medvedev: I congratulate you on the start of work this year. This is our first meeting on the economy in 2010, and it deals with one of our regular but nonetheless important matters, namely, the country’s budget.

I propose looking at three issues in brief. First, how prepared we are for executing this year’s federal budget. Second, adjustment of the budget indicators, taking into account amendments to the social and economic development plan. Third, defining the main approaches for formation of the budgets for 2011–2013.

In today’s situation, the most important thing is probably to ensure strict adherence to planned budget spending right from the start of the year, in other words, we need to guarantee timely financing in accordance with the plan for all budget items.

This requires us to pass legislative acts and make adjustments to the federal targeted programmes – something the Government is always working on anyway, usually starting from the end of the previous year. It is equally important to place state procurement orders and supervise state contracts’ implementation.

I want to draw your attention to this issue once again. Even though we did indeed face a crisis last year, a difficult time, it must be said nonetheless that it took the Government an unacceptably long time to get things stoked up, and state procurement contracts also took much longer to fulfil than we had planned. I worked personally on the state defence orders and recall how we were still having to push everyone to get the money through when half the year had already gone by. This was not a good situation. I think this was one of the shortcomings in our work last year, and it is something we must avoid this year.

According to updated statistics, this year’s social and economic outlook is more optimistic than it was a year ago. Compared to the figures used for calculating the 2010 budget, the basic forecast for GDP growth has been increased, if I recall rightly, from 1.6 percent to 3.1 percent.

This is good news, of course, but we also need to look at how sustainable this increase is, what is driving it, to what extent it will have an impact on the budget’s parameters, and also to what extent it correlates to exchange rate issues and current macroeconomic indicators, including inflation.

Of course, we must ensure that the entire budget system is stable, sustainable and balanced, while at the same time giving the federal budget a greater role. It should be a real economic policy tool that has a real influence on the economic processes underway in our country, including the economic modernisation efforts that we see as a key part of our national development over the coming years, development of innovation, and modernisation of the economic system in general.

This is the approach that should guide us in drafting the programme for making budget spending more effective. I note that this programme should be ready by March this year and it should be taken into account in drafting the 2011 budget and the budget plans for 2012 and 2013.

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It is good to see that the Government has got work underway faster this year than last year. Of course, last year was more difficult for understandable reasons, but we nonetheless need to correct past mistakes. It is therefore pleasing to see greater preparedness to start financing the main spending commitments.

Last year, all the documents were approved and all the regulations were in place, but nonetheless, financing for state contracts did not go ahead. I ended up having to personally handle this situation, as did the Prime Minister and a number of the ministers and deputy prime ministers here. It was a mess of a situation. We need to learn how to spend our money, and so I hope that last year’s problems have taught us some lessons.

We need to pass a number of new laws, including laws related to economic modernisation and innovation activeness. I hope that the programme will be ready on time. We will hold another meeting and discuss it here and in the Commission for Modernisation [and Technological Development of Russia’s Economy].

One other matter I wanted to mention here at the start of the year is that it is time to come back to the issue of our country’s investment climate. This is not to say that it is overly bad, but, speaking frankly, we have not done much of late to improve it, apart from the fact that we are now emerging from the crisis and working on modernising our country and economy and making the transition to development based on high technology, investment and innovation.

I propose holding a separate meeting to discuss this issue, and instruct the Government, in particular the Economic Development Minister, Finance Minister and other colleagues to draw up the necessary proposals. We will come back to this matter very soon I hope.