OREANDA-NEWS. May 14, 2010. Prime Minister Vladimir Putin's speech:  Good afternoon,  As you know, I have recently submitted reports to the State Duma and reaffirmed the invariable nature of our common strategic goals stipulated by the Long-Term Development Concept.

We need to build a modern competitive national economic model based on knowledge, innovations and state of the art technology.

Russia is called on to strengthen its leadership in the processes of integration underway in Eurasia and to occupy a worthy place in the global division of labour.

Most importantly, we need new living standards for Russian citizens, rising personal incomes, guaranteed access to education and healthcare services and expanded housing construction.

Naturally, considerable responsibility for attaining these goals rests the Ministry of Finance and the Ministry of Economic Development.

Today, I would like to draw your attention to the fact that we were forced to reallocate resources in an effort to overcome the consequences of the global financial and economic crisis. A proportion of those resources that could have been put towards modernisation, was instead spent on anti-crisis objectives.

Today, we are working amid considerably changed, to put it bluntly, tougher external and domestic conditions.

The events of the last few weeks have shown that it is still too early, too premature to say that the global crisis has ended completely.

Today Eurozone states are being forced to implement unprecedented measures in order to stabilise their financial systems, while the people have to pay for their previous macroeconomic miscalculations. In effect, a simple truth has been confirmed: in the long-term perspective only a responsible macroeconomic policy can facilitate steadily rising and improving standards of living among the population. I am deeply convinced that we must ensure macroeconomic stability. 

Last year, I repeatedly said that anti-inflation measures are a high-priority objective. In January-April 2010, nationwide inflation totaled 3.5%, hitting an all-time low since 1991.

However, we need even more ambitious plans to curb inflation. Inflation should remain low not only because of curtailed demand but primarily due to consistent implementation of government measures. Apart from a responsible financial policy, such measures should include other mechanisms for curbing price hikes, including expanded labour productivity, reduced outlays and cost-effective anti-monopoly regulation.

Furthermore, we should proceed from the fact that a low or even zero budget deficit is normal for Russia. Only such policy can make one feel confident amid fluctuating prices for our export products. We should not cut back on budgetary spending and forego unsecured debentures. We must unfailingly honour our commitments before Russia's citizens whatever the circumstances. Consequently, we have to stick to our timeframe and reduce the budget deficit to 3% in 2012 and then down to zero in 2015.

Today, I would like the Minister of Finance and the Minister of Economic Development to explain how this objective can be accomplished, and under what global oil prices and economic-development scenarios this will become possible.

Our financial safety nets, the Reserve Fund and the National Welfare Fund, were a great help during the global financial crisis. The policy of building up our reserves has proven to be entirely justified. We should continue it once the financial crisis has passed.

I would like to emphasise that ensuring a balanced budget is not a task for the Finance Ministry alone. It is a task for the entire government.

At our next government meeting we will discuss a draft programme to increase budget spending efficiency. In fact, the programme envisages crucial changes to the structure of our public administration: a transition to a new target-oriented budget structure.

State programmes will be at the core of government activity. This will help tie up the work carried out by each federal executive authority with the priorities outlined in our policy documents. Every budget rouble should be aimed at achieving the end result.

The programmes will provide not only for budget financing, but also for other instruments related to legal regulations, reduced tax and customs duty rates, federal property and so on. Naturally, all these programmes must be as transparent as possible and always open for public discussion.

I ask the Ministry of Economic Development and the Ministry of Finance to speed up the preparation of the legal basis for this, setting forth the main principles for drawing up long-term state programmes.

We should also take into account that within the next three years the Government's ability to increase expenditure will be limited, to put it mildly.