Briefing by Economic Development Minister Maxim Reshetnikov

RUSSIA, March 14 – Excerpts from the transcript:

Briefing by Economic Development Minister Maxim Reshetnikov

Maxim Reshetnikov: Colleagues, I will start with the current situation.

First, it is a structural crisis that has been caused by external factors, in particular external restrictions related to the export of goods and their imports, including components. Consequently, companies today face major challenges related to efforts to readjust production activities and, indeed, to the need to create new production and logistics chains. All this also overlaps with external logistical restrictions: companies are unable to provide the required goods and services. The economy therefore faces a systemic array of structural problems. And, of course, all this is linked to the current financial instability. Financial markets continue to search for a new equilibrium point, and it seems that they have failed so far. In summary, all this shows that it will take time to get the economy back on track.

In this regard, the government’s response is to ensure maximum economic flexibility and to lift all domestic restrictions. This does not only concern monitoring and surveillance activity. As you know, a large number of decisions have been approved, and this does not only concern small and medium-sized enterprises. A ban has been imposed on all scheduled and unscheduled inspections and audits, and it covers all businesses, regardless of size, with very few exceptions, namely high-risk facilities.

A resolution on the extension of all licenses and permits was signed today. The duration of more than 2.5 million documents of various types has been extended up to 12 months, which relieves a huge burden for companies. The most important thing is that, most likely, the main exception is related to changes in the procedure for certifying goods. In other words, companies will be able to independently readjust production processes and replace some components with others in the near future, that is, within the next six months. It will not be necessary to certify the goods in the laboratories, and the companies will be able to issue declarations based on their own production processes and they will take responsibility for these documents. Therefore, it will allow goods to be marketed much faster.

The same goes for imports. Product import and product certification procedures have been drastically relaxed. Now importers can import products faster and certify them as they bring them to market. Products can now be cleared on presentation of copies of documents, etc. We have worked with companies 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. It all literally went live this week.

At the same time, we have partnered with the Central Bank (CBR) to implement a number of programs dealing with financial support, mainly, to small and medium-sized enterprises. Last week, the CBR Board of Directors made a decision on easy-duration programs. The government has published the necessary documents for this purpose. A list of business activities where loans can be restructured has been established. At the same time, two preferential loan programs were launched with 300 billion rubles in the form of low-cost financing for banks so that they can continue to lend to small and medium-sized enterprises. Another 200 billion rubles will be available under joint programs with the Russian Small and Medium Business Corporation, etc. That is, this is also a large block of measures and they are in the process of being adopted.

Speaking of our philosophy in general, our current goal is to create the most favorable business environment, so that companies can act quickly to reconfigure supply chains and import products, including parts and finished goods, and create the production here. It is extremely important to maintain the flexibility of the pricing system, because with the type of exchange rate fluctuations we are seeing, it will take some time for prices to adjust to the new environment and the new structure of the supply and demand. It is very important to give companies the opportunity to do their job and adapt to the new environment. The government will help them to do this as best it can, and it is very important that we, as a major client financed by the state and acquiring budgetary goods, works 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 in the context of public contracts has increased) and to ensure that payments are made as quickly as possible. . This is also included in our offer to the private sector. These decisions are being prepared so that we, as a customer, can also stimulate the economy as much as possible.

The government is actively working alongside the Bank of Russia in these areas in constant communication with the private sector.

Gleb Fedorov (Website Obyasnyayem.rf): Here is a question that worries many people. Will the stores of foreign retail chains really close?

Maxim Reshetnikov: First of all, it depends on foreign retailers. It is up to them to decide what decisions to make, how to continue their operations and on what scale. As we know, such decisions have been made, but it is about suspending operations. Many of them are due to logistical problems. Foreign companies face the same difficulties as Russian companies. The first questions that foreign companies based in Russia asked us at a meeting last week concerned 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 on the basis of requests from Russian and foreign companies working in Russia.

At present, many companies have suspended operations. We believe that after readjusting their channels, many of them will definitely return 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 return to normal.

Question: Can we expect duty-free imports of goods, say, worth up to $5,000, under business support?

Maxim Reshetnikov: Last Thursday we looked at a wide range of products during our sub-committee on instructions from the Prime Minister. We have decided to submit a proposal to the Eurasian Commission to remove duties on these products, including foods, medicines, essential pharmaceutical substances, agricultural products and spare parts, to name a few.

We believe this is only the first package. We also have proposals from sectoral ministries that we are going to analyze. The Ministry of Commerce and Industry, the Ministry of Agriculture and the Ministry of Energy have drawn up their lists. We will study them and, of course, suggest canceling the duties on these goods for a certain period to help businesses readapt more quickly to the new environment.

Question: Price increases are another aspect that concerns everyone. What exactly is the government doing to solve this problem?

Maxim Reshetnikov: As you know we have gained some 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 dealing with this issue. But it is very important to maintain the most flexible pricing policies in the current situation, in conditions of rapid fluctuations in world prices and the exchange rate. We would soon be facing shortages of merchandise if we were too tough on dictating certain prices to chains and manufacturers. Therefore, relevant decisions are made based on the situation, specific types of goods and markets. But I would like to emphasize once again that we consider it very important to maintain a free market economy under these conditions. This alone will allow us to avoid a total collapse of our economic activity and facilitate the fastest possible recovery.