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On stability and stagnation in economy (interview to TASS)

March 4, 2020

The eighth part of Vladimir Putin's interview to TASS News Agency has been published.

The 20 Questions with Vladimir Putin project is an interview with the President of Russia on the most topical subjects of social and political life in Russia and the world. Total recording time is 3.5 hours.

Andrei Vandenko: Stability or stagnation? How does economic stability differ from stagnation?

Vladimir Putin: This is very simple. Economic stability is the foundation for development. Overall, stability is always the foundation for development, while stagnation is basically backpedaling without any development. That is the main difference.

Andrei Vandenko: Look, during the first decade of your tenure everything was booming.

Vladimir Putin: Yes.

Andrei Vandenko: Then, around 2008, we set off on bolstering our health by jogging in place.

Vladimir Putin: Well, firstly, it is very healthy. I will get to that – it is important. Secondly, the question is what benchmark we started from in 1999 and 2000. It was minimal, in fact, a pittance. Because then, if we begin with the key issue here, 42 million people lived below the poverty line. A third of the country’s population. Nowadays this number is still high at 13.5 million. But this is not a third, not 42 million. Nevertheless, it is still a lot. And we must combat this.

Vladimir Putin: Back then, the gold and forex reserves stood at $12.5 billion, and the national debt came to 145 billion. There was no end in sight; it was unclear how to sort it out. Since then and until now – as I say this, people may start having doubts, but this is a fact – real wages have grown by 4.2 per cent. Pensions have almost tripled (2.9 times). Real incomes have jumped 2.4 times.

Andrei Vandenko: Do you mean since 2000?

Vladimir Putin: Yes, since 2000.Those are definitely real things. Now, this does not mean that everything is fine today. Not at all. On the contrary. Moreover, people do not make comparisons with what it was like before, when it was bad, but rather with how good it is supposed to be in the future. When they see that their desires are not met, they feel let down. Frankly speaking, I agree with this perspective.

Andrei Vandenko: Especially since you made a promise. In 2008, we heard that by 2020 the average wage would be around $2,700. A family of three would have a 100-square-meter flat…

Vladimir Putin: Well, this is not quite correct. Those were preliminary plans.

Andrei Vandenko: Yes, plans. The so-called 2020 Concept.

Vladimir Putin: We planned to double our GDP by 2008 and based on this we compiled our social plans accordingly. In 2008, we had practically reached our goals. Then, the global financial crisis struck, not by any fault of ours, it came from beyond our borders. As a result, a far more urgent task appeared that we had to tackle. I want to remind everybody that here it was essential to prevent the economy from collapsing and the public’s savings from being wiped out. This was in 2008. I became Prime Minister then and had to publicly announce – this was a huge risk, frankly speaking – I announced that…

Andrei Vandenko: The risk was you being Prime Minister?

Vladimir Putin: No, it was what I said. What I said was this. I stated that I would prevent a repeat of the 1998 crisis, when all of the public’s savings had been wiped out. And we prevented that. But, indeed, it had a negative impact on our development. Honestly, we were not to blame for it. That global financial meltdown and the economic crisis that followed came from the outside.

Andrei Vandenko: I see. But incomes, real incomes have been on the decline in recent years.

Vladimir Putin: True. We are concerned about this; I am deeply concerned that this sort of stagnation has hit real incomes. There is an explanation. First and foremost, it is connected with a drastic drop in energy prices. Everything kept growing as long as oil was at $100 per barrel or higher. Now it is $60. Do you see the difference? It has practically halved. This explains why we launched these National Projects with the aim of changing the economy's structure and promoting self-sustaining development. But people cannot afford to wait for years, I understand this perfectly. I certainly understand that this is one of today’s key social issues. We need to do something about this. The government is obliged to do something to give it a boost. There are many ways.

Andrei Vandenko: Does anyone bear personal responsibility for the falling revenues and the rise in poverty? The latest figures show that the number has been on the rebound.

Vladimir Putin: Well, there were 13.4 million, now there are 13.5 million. The difference is not very big, but it does exist. These are real people. What can we say about personal responsibility at a time when world oil prices have slumped? What can we say about personal responsibility, if…?

Andrei Vandenko: But we wanted to wean ourselves off oil dependency.

Vladimir Putin: We wanted to do that, and we are gradually doing it, by the way. We are really moving away from it, because the share of non-oil and gas revenue is growing. But this requires time, and it cannot be done at the drop of a hat.

Andrei Vandenko: There has been a lot of talk about inflation; it is reducing, but people are more concerned about what they see in their refrigerators.

Vladimir Putin: True.

Andrei Vandenko: Macroeconomic figures may look good, but…

Vladimir Putin: Try to see my point. Low inflation means that prices go up very slowly or do not grow at all.

Andrei Vandenko: But they do go up.

Vladimir Putin: But slowly. Since the 2000s that you started from…

Andrei Vandenko: You did.

Vladimir Putin: Well, the 20 questions, that is where you started.

Andrei Vandenko: Well, yes.

Vladimir Putin: We had an inflation rate of 20.5 percent, I believe. And in 1999, when I became Prime Minister, it was 36 percent, or 35 percent, I believe. And in 1992, inflation was 2,600 percent. Now it is hovering around 3.4 to 3.5 percent. And that covers food prices. And people feel the bite of rising inflation since prices go up, taking a toll on people's wallets. It is another thing that along with targeting inflation, the public’s disposable incomes need to be raised. This is obvious. It is quite obvious. In the context of our economic structure, it is not that simple. But the Government is certainly obliged to make additional efforts. This is precisely what we are discussing.

March 4, 2020