MOSCOW, December 3. Russian economy as a whole overcomes the challenges associated with falling oil prices and Western sanctions, and positive trends become visible. However, unless competitive production is concentrated in the commodities sector, time to relax, said the President of the Russian Federation Vladimir Putin in the economic part of the Message to the Federal Assembly.
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The President stressed that in 2015, industrial production and the rate of the national currency have stabilized, there has been a decline in inflation, and significant reduction of capital outflow.
“But that doesn’t mean that we should calm down and wait that everything will miraculously change, or just wait for rising oil prices. This approach is in principle unacceptable,” Putin said.
The President warned that the period of low oil prices and the effect of Western sanctions imposed over events in Ukraine may be delayed. In this case, Russia will quickly “eat away” the accumulated reserves and the economic growth rate will remain at zero.
Putin also noticed that the structure of the world economy is changing, the formation of new trading blocs and new technologies. All this determines the international division of labour in the years ahead.
“Russia has no right to be vulnerable. We need to be strong in the economy, in technology, in professional competencies, to make full use of today’s opportunities,” he said.
Direct theft from the budget
Putin noted that a number of Russian industries, particularly construction, automotive, light industry and railway engineering, was at risk. These industries will receive state support. The President called for stricter control over the distribution of budgetary funds through subsidies and public programs, as well as the collection of customs duties.
“From‑for “grey” schemes at payment of customs duties, excise taxes on alcohol, tobacco and petrol, oil and lubricants budget annually loses hundreds of billions of rubles. This is direct theft,” – said Putin. He proposed to create a single mechanism for the administration of tax, customs and other fiscal payments.
The representative of the Secretariat first Deputy Prime Minister Igor Shuvalov said that the Federal tax service (FTS) and the Federal customs service (FCS) are actively working to create a single database of payments.
Putin stressed the need to balance the Federal budget in 2016, with a deficit not exceeding 3% even if the income is less than expected. On the eve of the recent third reading of the budget for 2016, Putin said that budget stability is a matter of national security.
“I just said that financial stability and independence are absolutely linked. Please consider these key, basic considerations,” – said Putin.
The head of state invited to respond to sanctions by expanding economic freedom and improving the business climate, entrepreneurs promising not to raise taxes and eliminate redundant checks.
“It’s the freedom of entrepreneurship, the extension of freedom of entrepreneurship – we have to answer all the restrictions that we’re trying to create,” Putin said. He proposed to extend the Amnesty of capital for entrepreneurs for six months, while simplifying its procedure.
No one should have illusions
Putin urged to develop program of import substitution, created by proposing to capitalize in this year the industry development Fund of 20 billion rubles, and also to provide regions the right to reduce to zero the tax rate on profits for projects under special investment contracts that are concluded by the Ministry of industry for a period equal to the output of the project profit and provide a number of benefits for investors.
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Key statements by the President of Russia to the Federal Assembly
The President proposed to give the government the right to procure on a sole-source basis up to 30% of its products established under special contracts. He stressed that the products produced in the framework of programs of support of import substitution should meet international standards and be competitive on world markets.
“No one should have illusions, that behind the substitution, you can shove the state and people of surrogates, or stale, overpriced goods,” Putin said, proposing to make the growth of non-oil exports one of the indicators of government effectiveness.
Measures to support domestic companies will include the tax and support the domestic corporate bond market.
The President also proposed to continue the support of agriculture, which is lagging the industry has turned to export, with revenue for the quarter more than from the sale of weapons for export. The President suggested that Russia could become the largest global supplier of organic food. To stimulate further growth in agriculture Putin has proposed to eliminate unused agricultural land.
“Look, we already how many years of talking about it? And things are there. Offer to withdraw from unscrupulous owners of agricultural land that has been misused, and sell them at auction to those who are willing and able to cultivate the land,” – said Putin.
The President also asked the government to establish a special project office for support of major projects, such as the creation of the major Russian operators in the field of Internet trading.
“One of the projects could be the creation of large private Russian companies in the field of e-Commerce that Russian goods were exported via the Internet to all countries of the world. We have to put”, – Putin said.