Sun. Jul 3rd, 2022

March 23, 2022

16:55

Novo-Ogaryovo, Moscow Region

Taking part in the meeting were Prime Minister Mikhail Mishustin

President of Russia Vladimir Putin: Good afternoon, colleagues,

Today, we will discuss a number of urgent issues in great detail, and we will focus on the situation in the construction sector, considering its fundamental role in the economy and its significant social dimension.

Before we do this, I would like to speak about a subject that I consider important. We have discussed this matter with our colleagues in previous days.

As you know, a number of Western countries have made illegitimate decisions to freeze Russian assets in the past few weeks. And the “collective West” has virtually drawn a line under the reliability of its currencies. We have also discussed this aspect; and the West has compromised trust in these currencies. The United States of America and the EU have announced that they are, in principle, defaulting on their obligations with regard to Russia. Today, everyone in the world knows – they suspected it before, but now they know – that dollar and euro obligations may not be fulfilled.

I have already provided a definition for such actions, and I am not going to go into detail. It is absolutely clear, though, that given the circumstances, it makes no sense for us to supply our goods to the European Union or the United States and be paid in dollars, euros or certain other currencies.

So, I have decided to implement, in the shortest possible time, a package of measures to transfer payments, to begin with, for natural gas supplied to “unfriendly countries” to Russian rubles; that is, we will not accept any compromised currency to be used in these transactions.

At the same time, on a separate note, I would like to note that Russia will continue to supply natural gas in the agreed to volumes and for the agreed-on prices as indicated in the existing contracts. Unlike some of our colleagues, we value our business reputation as a reliable partner and supplier.

These changes will affect only the transaction currency, which will now be Russian rubles. I want the Government to direct Gazprom accordingly and to amend the existing contracts.

At the same time, all our foreign consumers should be given an opportunity to make the necessary transactions, and a clear and transparent procedure for making payments should be created for them, including the purchase of Russian rubles on our domestic foreign exchange market. I want the Bank of Russia, in conjunction with the Government, to determine the procedure for such transactions within one week.

I propose moving on to the agenda, and I turn it over to Mr Mishustin.

Mr Mishustin, please go ahead.

Prime Minister Mikhail Mishustin: Mr President, colleagues,

During the previous Government meeting, which you held, I reported in detail on the measures that have already been taken as well as our plans. These proposals are being worked out in full contact with you, Mr President, on a daily basis.

Now, I want to elaborate in more detail on the existing set of solutions to improve the sustainability of the economy.

The operational headquarters is working almost around the clock and remains constantly in touch with the regions, as new measures are being discussed. In addition to the 20 already adopted federal laws, six more laws will be submitted to the State Duma soon. About 30 draft laws and additional proposals are in the works.

To date, along with the measures already approved, about 200 initiatives have been selected, which are included in the priority action plan, and we expect that most of them will become operational by late March.

One of our key tasks is to help those who now have to pay more in interest on previously issued loans or who took out loans with floating rates. The volume of this loan portfolio is estimated at about 11 trillion rubles.

In an effort to support these companies, a special restructuring procedure has been proposed. Mr President, you and I discussed this in detail. In the months ahead, borrowers will not be required to pay the full amount of interest but can capitalise it instead and put it off towards the end of the year.

At the same time, we will analyse the financial circumstances of these businesses and adopt additional decisions to support them. To do this, the Government will draw up a list of criteria for the borrowing companies that are eligible to have these interest payments written off in full.

On a separate note, payments by individuals under mortgage loans issued before the key rate changes will remain as they were as of the end of February.

The most important thing now is to support people. A resolution was signed on the maximum amount of a loan that will allow citizens to apply to banks for a grace period. They will be able to do this through late September, provided that their income is down 30 percent from the previous year’s average.

We paid special attention to the labour market. We will help those who want to find employment. Not only the unemployed, but also those who are at risk of being laid off can now use the employment centres’ services.

Many initiatives are designed to supply the domestic market with common goods. We have consulted with our colleagues in the Eurasian Economic Union (EAEU) and decided to increase the limit on duty-free e-commerce to 1,000 euros throughout the entire territory. Consumer goods, primarily food and medications will have priority during customs procedures at checkpoints.

One important area concerns the health of our people. Yesterday, we approved a proposal to support the sale of pharmaceuticals and medical goods by simplifying registration and purchase procedures, subsidising loan interest rates and further implementing the import substitution programme on critical medications and medical equipment.

Earlier, we simplified procedures for the purchase of medical equipment, introduced a temporary ban on the export of foreign medical goods, and created more opportunities for medical organisations to buy equipment at the expense of the Federal Compulsory Medical Insurance Fund. This will allow hospitals and outpatient clinics to buy medical equipment for surgeries and laboratory research in any situation, while people will be able to buy the medications they need.

Our airlines have faced major difficulties under the circumstances. Many airplanes with “foreign registration” instantly lost their airworthiness certificates without which they cannot be used. Parts supplies were discontinued and bans on insurance services were introduced. Foreign leasing companies are demanding that these aircraft be returned.

Based on the law on registering the rights to foreign aircraft you signed, we received an opportunity to use them inside the country.

The Government has helped carriers keep their fleets of foreign aircraft since the very first days. We are working to resume flights with these planes as soon as possible. Importantly, in taking these steps, we are strictly following the standards of aviation law, including the international regulations.

Obviously, our main goal is to ensure flight safety. This is above everything else.

We have transferred hundreds of aircraft – more than half the entire fleet – to the Russian Registry. To normalise the situation in this area, the Government took two resolutions. First, we made the registration procedure for listing Russian aircraft in the Russian State Registry as simple as possible and reduced the duration from 40 to five working days. Second, we adopted a document establishing a special mode for implementing aircraft leasing contracts with foreign companies. We have limited the return of these aircraft and aircraft engines to the owners. Russian carriers will be responsible for the technical maintenance and repairs in accordance with international standards.

The restrictions have also affected sea vessels flying the Russian flag – they are prohibited from entering foreign ports. We will definitely not leave such unfriendly steps towards our country unanswered. The Government will introduce proportionate counter restrictions. The respective resolution has been signed.

This is far from the whole list of measures that are currently being worked out.

A large package of measures has been proposed for the construction industry. Last year, construction in Russia showed record results, and we are preparing new support options. They will help Russian builders keep the rollout of civil and industrial premises at the same high level.

A third package of measures was considered yesterday. It includes shortening the investment and construction cycle and creating related infrastructure, as well as maintaining the procedure for changing the price of a state contract as the cost of resources increases.

A number of steps have been taken to support import substitution. Yesterday, the meeting of the operational headquarters board considered the possibility of adjusting the special programme to stimulate the development of design specifications by Russian enterprises. A draft of the relevant resolution has already been submitted to the Government.

A new online service, Import Substitution Exchange, has been launched. The platform should put together a broad supplier base and ensure the replacement of certain imported components with Russian ones, thereby creating demand for domestic products and speeding up the search for potential partners. This service will help develop supply chains and replace missing imported components.

A draft Government decision has also been prepared to facilitate the provision of state support for research projects to create priority industrial products.

The Special Investment Contract 1.0 format, revived in mid-March, has been adjusted, and a corresponding resolution has been signed. Such contracts can now be extended from 10 to 12 years, if restrictive measures by their foreign partners have affected the project’s implementation. Also, the mandatory requirements for the export of industrial products and the diversification of supplies will be removed.

Furthermore, we have supported contractors in public procurement – we have allowed them to write off their fines and penalties indefinitely if they violated their obligations under Government contracts due to the external sanctions.

This week, a resolution was signed to expedite payments for products or services delivered under state corporation contracts with small and medium-sized businesses, reducing the time to seven business days, so businesses can receive payments as soon as possible.

For smaller businesses, four programmes are now available to increase the availability of low-cost loans which include new investment loans for up to three years, an easy-term lending programme implemented as part of a targeted national project, and an increase in the maximum level of risk that the SME Corporation can assume for entrepreneurs under the so-called umbrella guarantee mechanism from the current 4.5 percent to 10 percent.

Another solution is now available for small businesses in a number of industries which will apply to manufacturing enterprises, as well as institutions of culture, sport and public health, as well as the beauty industry and travel agencies. It is proposed that we extend their deadline by six months for paying taxes under the simplified system for the last year and the first quarter of 2022 followed by instalment payments during six months. This will allow businesses to postpone these payments until autumn and free up about 37 billion rubles.

Mr President, under your instructions, ways to improve support for the regions was worked through in detail. To reduce the debt burden, a fundamental decision was made to delay the repayment of debt under budget loans to a later date; and, in order to create additional resources, to expand access to treasury loans to a total of 10 percent of their yield to generate additional resources (we discussed this during a meeting with the regions) for the implementation of ongoing projects.

I would like to note separately that many of the activities under the plan were prepared jointly with the constituent entities of the Russian Federation, with whom we maintain communication at all times, day and night. The heads of the regions approached this work responsibly, and I want to thank them as well. Everyone is constantly in touch.

Along with neutralizing the consequences of sanctions, the Government will continue to address the strategic issues that you, Mr President, have identified as part of the national development goals.

The bulk of the anti-sanctions measures focus on reducing administrative burden, namely, inspections, which should have a positive effect on the operation conditions for entrepreneurs and improve the business environment in the regions.

Our priority is to maximise the flexibility of the economy, to ensure uninterrupted operation of enterprises, and to keep employment intact.

My colleagues will get into more details about other measures.

Thank you.

Vladimir Putin: Thank you very much, Mr Mishustin.

Now I have a protocol event in my schedule. But before we take a short break, I would like to give the floor to our colleagues: Dmitry Patrushev, Denis Manturov and Mikhail Murashko, so that they briefly outline measures to ensure the availability of food, essential consumer goods, medicines and medical products. Let us begin with Mr Patrushev.

As we stated at the end of last year, there is an increase in prices on the global food markets. This is due to a number of objective factors, but what is happening in Russia today also imposes additional stress on the market. It is clear that in such cases there is a rush demand. True, we can see that it has already died down, but nevertheless, we need to look at the big picture and consider all factors that are creating a certain situation in the market.

(Minister of Agriculture Dmitry Patrushev reported that Russia fully satisfies domestic demand in basic foods. According to the Minister, the Russian agro-industrial complex will generally cope with any demand for food, including in case of a significant increase. He commented on the categories where there is peak demand and talked about measures that the Government was taking to promptly organise the production of the necessary items at Russian factories and solve the current supply chain problems, as well as about the progress of the spring sowing campaign and its financial support.)

Vladimir Putin: I hope that you and your colleagues in the regions will carefully monitor any developments in retail trade and respond to them promptly.

In this sense, we have a fairly high level of reliability. The main thing here is to monitor supply chain problems and to respond to them promptly.

I apologise, but we will have a break for about 15 minutes, and after that I will ask, as I already said, Mr Manturov and Mr Murashko to report on their areas.

Vladimir Putin: Mr Manturov, please.

Minister of Industry and Trade Denis Manturov: Thank you very much.

In addition to supplying retailers with food, as I reported to you at the previous meeting, we are monitoring the availability and production of non-foods in our country. The demand for certain categories of goods was two to three times higher than usual in late February and the first ten days of March, but now it has noticeably declined. Sales of certain items are still 30–40 percent higher than in the same period last year, although demand is rapidly becoming saturated.

Accordingly, warehouse stock levels of the most popular everyday goods are returning to standard level. For example, for personal care products, children’s items and household cleaning products the stock levels vary between two weeks and three months. For all these commodity groups, both Russian companies and multinationals meet the needs of the domestic market. And global producers with facilities in Russia are not going to stop them and do not want to lose their share.

(The Minister went on to give specific figures for children’s sanitary and cosmetic products and other personal care products. According to him, 84 percent of detergents are produced in Russia. In the event that even a small fraction of imported goods are withdrawn, Russian and localised foreign companies are ready to increase their production volumes).

We have not noticed any surge in demand for a wide range of clothing or footwear. At the same time, given the objective rise in prices and the suspension of sales of some imported brands, our own domestic clothing production is gaining a good advantage.

Of course, our consumers are used to a variety of brands, especially foreign ones. The disappearance of some of them does not mean that the population will have problems buying clothes. There are currently more than a thousand Russian clothing, footwear and fashion accessories brands, and a favourable situation is emerging for them in terms of a more advantageous price-quality ratio.

We are in no hurry to look for foreign replacements for certain foreign brands, especially since consumers have their own preferences. Now is the time for Russian production and brands to start growing, and for new clothing and footwear chains to start appearing. We will assist our companies in this work in every possible way.

Regarding durable goods, we put together about 90 percent of household appliances and electronics, mostly of foreign make, with varying amounts of domestic content. Inventories of already-made goods will last from 1.5 to 3 months. The production of foreign components and logistics difficulties are certainly increasing costs, which is reflected at the retail end for consumers. However, producers have reserves of spare parts for several months, which makes it possible to alleviate these increases to some extent.

The companies that assemble their products on Russian territory do not plan to leave the Russian market, especially since many of them have research centres here. This confirms again that they will stay in our market.

As for the import of household appliances, our main suppliers are friendly countries that have no stake in suspending their exports.

Our furniture industry is fairly independent with the exception of probably a small amount of premium goods. Over 70 percent of furniture in the domestic market is made at home. In effect, we have always emphasised building up mass production of furniture.

The same applies to finishing building materials. In this segment, the share of imports does not exceed 4 percent. These include mostly tiles, bathroom ceramic and dry building mixes; but even for these items, domestic producers and localised companies amount to over 80 percent of sales.

According to our information, nobody plans to quit our building materials market. Moreover, it is now being evaluated by new foreign investors that have the technology, raw materials and equipment.

In general, I can say that statements by some brands on the suspension of their activities have not yet exerted serious influence on the non-food market. Only very few companies have announced a final decision to leave the market. Others are reducing advertising and pointing to supply problems but continue paying wages and the lease for their facilities. All of them understand that at the current level of competition it is very easy to give up on the market but much more difficult to come back to it later.

We continuously monitor the activities of the main companies here, primarily foreign companies, which sell non-food products in our market and will continue to do so.

Thank you for your attention.

Vladimir Putin: Even partial departure of a foreign producer will certainly create a unique opportunity for developing domestic production. This is clear.

That said, we need to do everything we can to maintain domestic competition, to prevent any monopolisation. This is absolutely clear. Of course, I would like to ask you to make sure that the range of goods in the market is broad enough for people to choose what they want.

Mr Murashko, please brief us on medical products and medications.

Minister of Healthcare Mikhail Murashko: Mr President,

If I may, I will briefly cover regulations and trade in medical products. Prior to the pandemic, we created a fairly well-developed regulatory system. By “developed” I do not mean bureaucratic mechanisms, but clear and easy-to-follow rules for trade, for both manufacturers and businesses, as well as a high level of digital technology and government systems.

Today, we can see every labelled pharmaceutical package, and we know exactly how many of them are in circulation which makes it possible for us to estimate and forecast the demand for medications.

We know the exact number and types of medical products that are registered in the Russian Federation and are purchased by medical institutions and companies under tendering procedures. These mechanisms and tools made it possible for us to respond in a timely manner to the challenges of COVID-19, when with closed borders and simultaneous global demand for medical products, we teamed up with the Ministry of Industry and Trade and the regions to provide customers and public healthcare organisations with medical products.

In order to ensure uninterrupted access to medical products for the public, we have identified six priority areas.

First, to stabilise the situation, we need a monitoring system. It involves the Ministry of Industry and Trade, the Finance Ministry, the Federal Anti-Monopoly Service and the digital technologies we are using today. We are quickly developing and approving new mechanisms to address the issues faced by manufacturers or distributors.

(As an example, the Minister cited the temporary unavailability of several medications in pharmacies, the sales of which, in early March, increased greatly due to the fact that people were buying them up and hoarding, which caused delays in the supply chains. Addressing the public, Mikhail Murashko said that manufacturers and distributors have no problems with production or stock. Currently, the public healthcare system has ample supplies of these medicines, and there is no need to stock up on them.)

Yesterday, we gathered together major federal suppliers, and they told us that consumption rates are back to March 2021 levels. Production and deliveries continue as planned.

Preventing auction-related risks during this period is the second most important area of focus for us. The Government has amended the law to simplify the procedure for purchasing medical goods and expendable materials, as Mr Mishustin mentioned in his remarks.

As per your instructions, Mr President, we have established the Federal Centre for Planning and Organising Provision of Medicines for Citizens for centralised purchases of medicines under the state programme “14 cost-intensive nosologies” – it covers the provision of medicines for people with Hepatitis and HIV. In particular, we are purchasing large amounts of medicines for the Circle of Kindness Foundation. Purchases will fully cover our needs; as of now, 85 percent of medicines have been delivered. We do not envisage any risk for chronic patients from these groups. This system has been used for many years for the timely supply of medicines to each patient.

I would like to note that by increasing the volume of contracted batches and by signing long-term contracts, we are saving budgetary funds and reducing logistics and storage costs.

We are already making plans for 2023 to ensure guaranteed contracts for producers and for the timely delivery of medicines to patients.

The fourth priority area is using these mechanisms for the distribution of medical products. We are working with the Ministry of Industry and Trade, with a focus on domestic producers.

With this in view, we have prepared priority lists of medical products to be created and produced and have sent them to the Ministry of Industry and Trade and the Russian Academy of Sciences. Russia has the necessary competencies for many of them.

Our next priority is to remove the obstacles to the delivery of effective quality medical products to the Russian market. This involves the special registration procedures needed to validate a products’ effectiveness and safety. Therefore, to be able to launch a direct dialogue and to create clear and understandable procedures, we have amended the medical products file. This will facilitate the work of producers and will reduce the period of consideration.

We are also creating a hotline on medicines at an expert facility.

We are holding consultations on the registration of medical products. This is a complex area, which is why we need such consultations.

And the sixth and final priority concerns the highly sensitive issue of medicine price control. This is being done within the framework of state regulation of prices of vital and essential medicines. These prices are fixed and can only be changed for objective reasons to ensure affordability for users, including at pharmacies.

In conclusion, I would like to point out that the measures we have adopted, and are still considering at the interdepartmental level, have a cumulative effect and are aimed at ensuring physical availability and price affordability, as well as diversity of medical products.

Thank you. This concludes my report.

Vladimir Putin: Thank you.

I would like to repeat what I said after Mr Manturov’s report.

The departure or potential departure of some foreign producers from our market creates unique opportunities for domestic companies. This is how it was with the development of our agro-industrial sector when we restricted the activities of some foreign producers of agricultural products and the processing industry in our market.

Obviously, at this point we must support our producers. At the beginning of our meeting, the Prime Minister talked about a number of measures that the Government is taking to make this support tangible. I know the Government is working on other measures as well. It is necessary to continue working on this together, in cooperation both with the Bank of Russia and the Executive Office.

These efforts are bound to produce the desired effect, like they did in the agro-industrial sector. But of course, we must ensure quality and variety and enhance rather than hurt the competitive environment in the market. I am hoping this is how it will be, and I do not have any doubts about this.

Let’s turn to the next item, which is the main issue. Today we will review the implementation of our programmes on developing infrastructure, building capital facilities, including schools and hospitals. We will discuss separately the mechanisms for supporting housing construction, one of the main sectors in our national economy.

Let me recall that at a recent meeting with the regions held on March 16, we made several important decisions on this. Let’s discuss how they are proceeding.

What are these about? Some issues were already mentioned, but I will repeat them.

First, we decided that public capital investment would be funded as a priority. Supplies of materials and the implementation of projects must be funded in full as planned. As for the implementation of projects as such, this needs to be more flexible and open to different technological solutions and the use of components within a given range.

To be continued.

Source – The Russian Kremlin

Clear text: http://en.kremlin.ru/catalog/keywords/128/events/68037