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Steps to bolster Russian economy in focus of presidential message to parliament

December 04, 2014, 16:04 UTC+3 MOSCOW
This is precisely what many had expected to hear in the current no easy economic situation exacerbated by sanctions, plummeting oil prices and the slump of the national currency
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© Mikhail Metzel/TASS

MOSCOW, December 4. /TASS World Service/. In his annual message to the Federal Assembly on Thursday noon Russian President Vladimir Putin put the emphasis on measures to bolster economic growth and to create the best conditions possible for doing business. This is precisely what many had expected to hear in the current no easy economic situation exacerbated by sanctions, plummeting oil prices and the slump of the national currency, the rouble. Putin called for an end to the sweeping control of businesses, for a four-year freeze on taxes at the current level and for the lax taxation of those about to go in business. Also, he urged full amnesty for capital returning to Russia.

Putin came out for more freedom in the economic, social and civil spheres, saying that would be the best response possible to the modern challenges.

Any inspection of a business by any watchdog should be transparent and the relevant information be made public in a corresponding register. “Each inspection must be public. Next year a special register will be launched to provide information which agency initiated this or that inspection, for what purpose and what results will be received.” Putin suggested a three-year suspension of all checks all small businesses with an impeccable record for the previous three years.

Putin declared the need for freezing the current system of taxation in the country for four years to come and for restricting the tax burden on start-up projects for two years.

“Business people do have a point when they emphasize the need for a stable legislation and predictable rules, including taxation. I fully agree with that. I suggest keeping the current taxation intact for four years to come and not raising the issue again and again,” he said.

Full amnesty for capital brought bac to Russia

Putin proposed a single-shot full amnesty of all capital that may be brought back to Russia. “If a person decides to legalize one’s assets and property in Russia, in exchange he will have firm legal guarantees he will not be ping-ponged from one body of power to another, including law enforcement agencies. He will not be asked about the origin of capital, either. He will not face criminal or administrative prosecution. The tax authorities and law enforcers will not be asking any questions,” Putin explained.

Putin asked the Bank of Russia and the government to take harsh measures against profiteers on the currency market. “I am asking the Bank of Russia and the government to take firm, coordinated measures to wean market profiteers off playing games on Russian currency fluctuations. The authorities know who the profiteers are and they have the leverage to influence them. Time is ripe for putting this leverage to use,” Putin said.

The leading Russian banks must have a chance to take capital from the National Welfare Fund to provide lending to investment projects in the real sector of the economy,” he said. “My proposal is a special program should be launched at the expense of our reserves, in the first place, the National Welfare Fund to recapitalize the leading national banks. The money would be provided on the fundamental conditions of subsequent investment in the most significant projects in the real sector of the economy against affordable interest rates,” Putin said.

Infographics Countries with the most favorable conditions for doing business Countries with the most favorable conditions for doing business
World Bank Group published a new Doing Business Report, assessing the simplicity of running business in 189 countries based on several factors. Infographics by TASS
Increase in investments

Putin set the task of building up the level of investments up to 25% of the GDP by 2018.

He believes that restoring order to the building industry at the budget’s expense will help save 10-20% of public money. “A huge reserve for the economy lies on the surface. It is enough to just take a look at the government-financed construction projects,” he said. He believes that such a practice should be spread to all budget-financed civil projects.

“For the next three years we should set the task of lowering costs and ineffective budget spending by no less than five percent of all incomes in real terms every year,” Putin said.

Other topics of the address

In the international section of the message Putin paid special attention to the situation inside and over Ukraine. He promised that Russia would not blindly follow Western policies. He warned that the “policy of containment” was a no surprise to Russia and dismissed attempts to talk to Moscow from the position of strength as futile.

The current events in the south-east of Ukraine merely confirm Russia’s opinion last February saw a government coup in Ukraine, Putin said, adding that the human rights talk masking that hard fact was hypocritical. He advised the West to avoid making vain promises and to provide real assistance to Ukraine in reforming its economy instead. Russia lately already lent Ukraine an estimated 32.5-33.5 billion dollars, he recalled.

In his speech addressed to the Federal Assembly Putin accused the United States of exerting direct pressures on Russia’s neighbours. He recalled that Moscow’s opinion was utterly ignored in discussing the plan for Ukraine’s association with the European Union. About the sanctions the West had taken against Russia Putin said they stemmed from the wish to restrict Russia’s growing capabilities, adding that the sanctions “are harmful to all, including those who take them.”

But talking to Russia from the position of strength would be useless, he said.

Putin declared that Russia would avoid involvement in another arms race and manage to find off-beat solutions to maintain its defence capabilities.

“There should be no doubt that will be done. Russia does have the opportunities and such off-beat solutions, too. No one will manage to gain military advantage over Russia,” he said. “Russia will never opt for the path of self-isolation, xenophobia, suspiciousness or finding foes. Acting that way would be a manifestation of weakness. We are strong and self-confident. Our goal is to gain as many equitable partners as possible in the West and in the East,” Putin said.

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