By Henry Meyer and Lyubov Pronina
Nov. 20 (Bloomberg) -- Russian Prime Minister Vladimir Putin vowed to do ``everything'' to prevent the kind of financial crises that shook the country after the collapse of the Soviet Union.
Putin unveiled new measures to counter the effects of the global economic crunch, including corporate tax cuts and higher welfare payments, and promised to defend the ruble.
``We'll do everything we can to prevent a repeat in our country of the problems of past years, the collapse of past years,'' Putin told the annual congress in Moscow today of the ruling United Russia party which he heads, broadcast live on state television. ``We have amassed sizable financial reserves which will give us the freedom to maneuver, allow us to maintain macroeconomic stability.''
Putin, 56, is bolstering his public role in response to a global slowdown that has punctured Russia's 10-year oil-fueled boom, amid growing speculation that he may seek to return to the Kremlin as president next year.
Putin remains at the center of power after handing the presidency in May to his chosen successor, Dmitry Medvedev, 43. He may persuade Medvedev to step down, triggering snap elections that would enable Putin to reclaim the No. 1 post for as many as 12 years under a new six-year presidential term, analysts say.
``Medvedev can announce that he isn't coping and it's better if an experienced political leader takes the reins again,'' said Leonid Sedov, a political analyst at the Levada Center research group in Moscow.
Oil, Gas Exports
As the U.S., Europe and Japan slip into recession, the price of oil has fallen below $50 a barrel in New York from a July high of almost $150, hurting Russia, the world's largest energy exporter, which relies on oil and gas for two-thirds of its export earnings.
Russia's economic growth will slow to 3 percent next year after average expansion of 7 percent a year since 1999, the year after the 1998 financial default, the World Bank estimates.
Russia in August 1998 defaulted on $40 billion of debt and devalued the ruble, wiping out the life savings of millions of people overnight and pushing the government to the edge of bankruptcy.
Russia ``won't allow a spike in inflation or sharp changes in the ruble's exchange rate,'' Putin said. Bank deposits are safe in Russia because 98.5 percent of all retail deposits are fully covered by a state guarantee, he said.
Tax Cuts
Putin announced that the government will cut the tax rate on corporate profits by 4 percentage points in January, reduce taxes for small businesses and speed refunds of value-added tax. Unemployment benefits will rise next year to 4,900 rubles ($178) a month as ``structural'' labor-market changes loom, he said.
Plans to inject funds into health and education and increase social spending under a long-term strategy until 2020 will not be abandoned, Putin said. Pensions will rise 50 percent by 2010, he added.
With Urals crude already $20 below the $70 average required to balance Russia's budget next year, the government is depleting its reserves, the world's third-largest.
Already Russia has spent 24 percent, or $144.6 billion, of its central-bank stockpile since early August, mostly on a failed attempt to defend the ruble, which has lost more than 17 percent of its value against the dollar during that period.
The ruble snapped a four-day drop after Putin's speech, rising 0.2 percent to 27.5657 per dollar by 2:40 p.m. in Moscow, from 27.6196 late yesterday.
The tax cuts announced amount to 550 billion rubles, Finance Minister Alexei Kudrin said. Putin also pledged 50 billion rubles for the defense industry and 83 billion rubles for new housing.
Boosting Liquidity
The government has already pledged more than $200 billion in loans, tax cuts, delayed tax payments and other measures to boost liquidity in the financial system during the credit crunch.
Russia's budget may have a 1 percent deficit next year, which will be the ``peak'' of the global crisis, and Russia will use its oil reserve fund to cover the shortfall, Kudrin said.
Putin accused certain politicians of complacency inherited from the years of high prices, which he criticized as ``absolutely unacceptable'' in today's crisis. He didn't name any of the politicians he attacked.
``This will inevitably lead to mistakes that will cost us the trust of the Russian people,'' he said in his speech. ``In difficult circumstances, the real capabilities of public institutions become clear.''
Putin Call-in Show
Putin will again take center stage next month by holding a live call-in show on national television.
Putin has held a nationwide call-in every year since 2001, broadcast live and lasting several hours, with questions on a wide range of issues submitted by TV link-up, phone and Internet. The event dominated TV news coverage on the days it aired.
Russia's lower house of parliament is close to approving a constitutional amendment that would extend the president's term to six years from four.
The measure will probably secure final legislative approval by mid-December. It would allow Putin, who stepped down after serving two consecutive terms, the constitutional limit, to serve at least another 12 years if he again becomes president.
-- With reporting by Emma O'Brien, Alex Nicholson, Maria Levitov and Denis Maternovsky in Moscow. Editors: Leon Mangasarian, Alan Crawford.
To contact the reporters on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net; Lyubov Pronina in Moscow at lpronina@bloomberg.net.
Posts
No comments:
Post a Comment