Excerpts from the transcript:
Briefing by Minister of Economic Development Maxim Reshetnikov
Maxim Reshetnikov: Colleagues, I will start with the current situation.
First, this is a structural crisis that has been caused by external factors, in particular external restrictions linked with exports of goods and their imports, including components. Consequently, enterprises now face major challenges linked with efforts to readjust production activities and, in effect, the need to create new production and logistic chains. All this also overlaps with external logistic restrictions: enterprises are unable to deliver the required goods and services. The economy therefore faces a systemic array of structural issues. And, of course, all this is linked with the current financial instability. Financial markets continue to look for a new point of balance, and it appears that they have failed so far. Summing up, all this shows that it will take some time to put the economy back on track.
In this connection, the Government’s response is to ensure maximum economic flexibility and to lift all domestic restrictions. This does not concern control and oversight activity alone. As you know, a large package of decisions has been approved, and it concerns more than small and medium-sized businesses. A ban has been imposed on all scheduled and unscheduled inspections and audits, and it covers all enterprises, regardless of their size, with very few exceptions, namely high-risk facilities.
A resolution on extending all licences and permits has been signed today. The duration of 2.5 million-plus documents of various kinds has been extended for up to 12 months, and this removes a huge load from enterprises. The most important thing is that, quite possibly, the main exception is linked with changes in the goods certification procedure. In other words, enterprises will be able to independently readjust production processes and replace certain components with others in the near future, that is, over the next six months. It will not be necessary to certify goods at laboratories, and enterprises will be able to issue declarations based on their own production processes and they will assume responsibility for these documents. Consequently, this will make it possible to market goods much more quickly.
The same applies to imports. The procedures for importing products and product certification have been drastically relaxed. Now, importers can import products faster and certify them as they put them on the market. Products can now be cleared upon presenting copies of documents, etc. We worked it through with the businesses under the law signed by the President, the first anti-crisis package. The Government was given broad powers and took advantage of them to make these procedures possible. All of that has been put into operation literally this week.
At the same time, we teamed up with the Central Bank (CBR) to implement a number of programmes addressing financial support, primarily, for small and medium-sized businesses. Last week, the CBR Board of Directors made a decision on easy-term programmes. The Government has issued the necessary documents to this end. A list of corporate activities where loans can be restructured was drawn up. Concurrently, two preferential lending programmes have been launched with 300 billion roubles in the form of low-cost funding for banks so that they can continue to issue loans to small- and medium-sized businesses. An additional 200 billion roubles will be available under joint programmes with the Russian Small and Medium Business Corporation, and so on. That is, this is also a large bloc of measures and they are being adopted.
Speaking of our philosophy in general, our current goal is to create the most favourable business environment, so that businesses can take swift action to reconfigure supply chains and to import products, including parts and end products, and to create production here. It is critically important to keep the pricing system flexible, since with the kind of exchange rate fluctuations we are witnessing, some time will be needed for prices to adjust to the new environment and the new supply-demand structure. It is utterly important to give businesses the opportunity to do their job and to adapt to the new environment. The Government will help them do so as best it can, plus it is very important that we, as a major publicly funded customer acquiring budgetary goods, work and services, also maintain stability.
It is important for us to make advance payments on time (you are aware that the level of advance payments under government contracts has increased) and to have payments made as quickly as possible. This is included in our offer to the private sector as well. These decisions are being prepared so that we, as a customer, can stimulate the economy as much as possible as well.
The Government is actively working alongside the Bank of Russia across these areas in constant communication with the private sector.
Gleb Fedorov (Obyasnyayem.rf website): Here’s a question that worries a lot of people. Will shops of foreign retail chains really close down?
Maxim Reshetnikov: First, this depends on the foreign retailers. It is up to them what decisions to make, how to continue their operations and on what scale. As we know, such decisions have been made, but they are about suspending operations. Many of them are caused by logistics problems. Foreign companies are facing the same difficulties as Russian businesses. The first questions Russia-based foreign companies asked us at a meeting last week were about logistics, the need to readjust production chains and find suppliers in Asian countries to replace European ones. The package of decisions I mentioned was formulated and implemented based on the requests of Russian and foreign businesses working in Russia.
At present, many companies have suspended their operations. We believe that after readjusting their chains, many of them will certainly get back to work in Russia because our market has not disappeared. They made money here for a long time and had a profitable business in this country. This gives us reason to hope that the situation will get back to normal.
Question: Can we expect duty-free imports of goods, say, worth up to $5,000, as part of support for businesses?
Maxim Reshetnikov: Last Thursday, we reviewed a wide range of products at our sub-commission on the Prime Minister’s instruction. We decided to submit a proposal to the Eurasian Commission to cancel duties for these products, notably, foods, medications, essential pharmaceutical substances, agricultural products and spare parts, to name a few.
We believe this is just the first package. We also have proposals from sectoral ministries that we are going to analyse. The Ministry of Trade and Industry, the Ministry of Agriculture and the Ministry of Energy have compiled their lists. We will study them and, of course, suggest cancelling duties on these goods for a certain period to help companies readjust quicker to the new environment.
Question: Price hikes are another aspect that concerns everyone. What exactly is the Government doing to resolve this issue?
Maxim Reshetnikov: As you know, we have gained certain experience in interacting with retail chains and manufacturers during Covid-19 restrictions, etc. The Ministry of Industry and Trade, the Ministry of Agriculture and the Federal Anti-Monopoly Service are actively addressing this matter. But it is very important to retain the most flexible pricing policies in the current situation, in conditions of rapidly fluctuating global prices and the currency exchange rate. We would face shortages of goods very soon if we are too tough in dictating certain prices to chains and manufacturers. Consequently, the relevant decisions are made depending on the situation, specific types of goods and markets. But I would like to note once again that we find it highly important to retain a free-market economy in these conditions. This alone will allow us to prevent an all-out slump in our economic activity and to facilitate the fastest possible recovery.
