What Vladimir Putin talked about at SPIEF in 2023

President Vladimir Putin spoke on June 16 at the plenary session of the St. Petersburg International Economic Forum (SPIEF). He outlined the main priorities of economic and budgetary policy for the near future. The President’s speech at SPIEF this year was a record-breaking one — it lasted 1 hour and 19 minutes.

The strategy for overcoming the crisis in 2022, chosen by the state and business of Russia, has justified itself, Vladimir Putin began. He recalled that the second quarter of 2022 was the most difficult for the economy and domestic business. “Circumstances, the usual order of trade, settlements, logistics were rapidly changing – in fact, the whole fabric of business and economic life was being redrawn,” he noted.

However, the strategy chosen a year ago “worked” and brought results. Putin said that the GDP indicator in April 2023 increased by 3.3% in annual terms, by the end of the year it should add, according to the IMEF, 0.7%. “Some experts believe that the growth could be more – up to 1.5-2%,” he said. According to Putin, such indicators will allow Russia to maintain its place among the world’s leading economies. And “positive macroeconomic trends are gaining momentum.”

The President noted growth in industry and retail trade in April. The volume of output in the processing industries exceeded last year’s figures by 2.9%. “It was this area that was under the strongest blow due to the rupture of cooperation ties and chains,” the president noted.

In such conditions, it was fundamentally important to give business a foothold, strengthen confidence in the policy being pursued, emphasize guarantees for the protection of property, he said. And this was achieved thanks to a balanced budgetary and monetary policy. As a result, Russia reached the minimum values ​​of unemployment and inflation, which approached the historical minimum and amounted to 2.9%, Putin stressed. An unemployment rate of 3.3% “has never been seen before in our history.”

Putin also noted that a stable macroeconomic situation has become a competitive advantage for Russia and an effective development factor. According to the president, using budgetary mechanisms and monetary instruments, it was possible to maintain demand in the economy, provide enterprises and companies with work and prevent “price spikes”. “We will continue to build our macroeconomic policy taking into account the real situation and focusing on target inflation, as we did last year or during the pandemic,” Putin said.

The President noted the growth in the dynamics of non-oil and gas revenues: in the period January-May, they grew by 9.1%, in May 2023 – by 28.5%. This is an important indicator of the development of the real sector of the economy, manufacturing enterprises, trade and services, he said.

The development of regional infrastructure today creates new business opportunities, including in the field of tourism, the President noted. In 2022, according to Putin, the domestic tourist flow increased by 16.7%, which in absolute terms is almost 10 million people.

“We need to more dynamically develop high-quality infrastructure for recreation in our country. And focus not on current figures, but on the fact that the tourist flow will continue to increase. In this regard, I propose to expand the program of concessional lending to hotel projects, to focus on supporting the most demanded segment: three to four stars,” he said.

He also proposed to include in this financing program the construction of year-round amusement parks, water parks, ski resorts.

Putin noted the active development of the format of outdoor recreation in modular hotels, the so-called “glampings”, for the construction of which the state allocated 4.2 billion rubles in 2022. At the same time, the demand, according to him, is much higher.

“I propose to allocate an additional 11 billion in the next two years to support the construction of modular hotels. This will make it possible to implement another 470 projects of this kind,” he said.

Russia has been and will be involved in the world economy, the President assured. He recalled that the state has simplified the regulation of foreign trade, reducing by several times the fines for violating the currency legislation and canceling them in case of external unfriendly actions. This moratorium will be extended for the next 2024, and during the period of its validity, business will not be liable for forced currency violations, the head of state said.

“At a recent meeting with representatives of the Delovaya Rossiya public business association, colleagues directly raised the issue of an amnesty in the foreign exchange sector. <…> Now that violations of obligations by Western counterparties have become a common practice, I think it is right to meet business halfway on such an acute issue, namely, I propose to declare an amnesty for businesses for forced currency violations committed during the moratorium,” Putin said.

Russia needs to strive for a “supply economy” that “not only responds to market conditions and takes into account demand, but itself forms” it, Putin said. One of its most important components, according to the president, is the improvement of the employment structure: retraining of personnel, increasing the economic activity of citizens.

He noted that one of the priority tasks is also to increase the orientation of universities towards the successful employment of graduates. To implement it, Putin proposed to establish performance indicators for them and, on their basis, to form ratings of educational institutions.

Another proposal of the president was the formation of an annual five-year forecast of the need for personnel in order to “take into account changing trends and new demands of the labor market as flexibly as possible.”

Putin also asked the government to form a mechanism for a student agreement. “Its meaning is that the employer, at his own expense, sends the employee to study, improve their skills. And the employee, in turn, receives a guarantee of employment in a more qualified job. Naturally, here it is necessary to create incentives for businesses to use such a mechanism. Including with the help of state support,” he said.

According to the president, expanding measures of social support due to being tied to the level of income of citizens often become a reason for them not to look for higher-paying jobs and increase income. State support should serve precisely as an aid to wages, and not as a replacement, Putin said.

He proposed to pay allowance for a child up to one and a half years and a single child allowance for the entire period for which they are assigned, regardless of a possible increase in family income, and also to maintain the allowance for the care of disabled children with part-time employment of their parents or guardians.

Putin considers the expansion of entrepreneurial activity an important direction in the development of the economy. More than 28 million people are employed in small and medium-sized businesses in Russia. Since the beginning of 2022, the number of self-employed has doubled, reaching 7.6 million. The president cited such data, offering to support people who are taking their first steps in business. In particular, to create opportunities for additional training of start-up entrepreneurs at the expense of the state on the basis of the My Business centers.

Then Putin announced his support for the umbrella mechanism for lending to small and medium-sized businesses. “We are talking about the guarantees of the corporation SME in cases where entrepreneurs do not have enough collateral to obtain a loan,” he explained. The corporation provides a guarantee for up to 50% of the loan amount for up to 180 months. “Today, this mechanism operates in all regions, with its help more than 39,000 loans were issued for a total amount of over 350 billion rubles,” the president said. The demand for such a tool, according to the head of state, is high, especially in the areas of industry, tourism and the IT sector. The mechanism is working well and efficiently, so it is necessary to extend the program until 2030.

During his speech, Putin also instructed the government to prepare special support measures for enterprises that have grown and cannot apply for state support by the end of 2023.

“I consider it necessary to expand the scope of this measure, to include here the so-called SME+ category – these are medium-sized enterprises that, despite certain difficulties, have grown in recent years and, according to formal criteria, such as employment, revenue, can no longer apply for state support, but are in an important stage of growth, an important stage of growth, need resources,” he said. For such companies, it is proposed to introduce special support measures.

A number of other proposals, according to the President, appeared as a result of meetings with business associations – the Russian Union of Industrialists and Entrepreneurs, as well as with Delovaya Rossiya. Putin announced the need to double the thresholds for large and especially large property damage under a number of economic articles of the Russian Federation.

“For more than 10 years, we have not changed the thresholds for large and especially large property damage that is not related to theft, as well as for violations of copyright and related rights. I would like to pay special attention to the latter, since now foreign companies themselves refuse to supply software and other services. I think it is right to raise these thresholds at least twice,” he said.

The same is proposed for the economic structure of crimes, where deprivation of liberty is not applied. “I mean avoiding disclosure of information under securities laws,” Putin said.

Another measure to support entrepreneurship concerns the limitation of inspections and other control measures. The President recalled that in 2022 a moratorium on scheduled inspections of Russian business was established and then extended to 2023. For entrepreneurs whose activities are not associated with high risks of harm, the moratorium is valid until 2030. As a result, 339,000 inspections were carried out in 2022 – 20% less than in 2020, and almost five times less than in 2019

“I believe that if a business is not associated with high risks of causing harm to citizens or the environment, then it should not be checked at all either routinely or unscheduled, preventive measures are enough,” the president said. It will be possible to assess how the proposed measure will work next year, he said.

Putin also called on the government, together with the Prosecutor General’s Office and the Ministry of Internal Affairs, to additionally enshrine in the legislation the rule that inspections should be carried out only by relevant departments.

“Entrepreneurs say that now, instead of the control of supervisory authorities, law enforcement officers began to come <...> Concepts are being changed. We say there will be no checks, but in practice it turns out that there will be, only it is called differently and other people come. Of course, this undermines the confidence of business in the reform of the control and supervision sphere, and affects the work of business,” the president emphasized.

In conclusion, he explained that state support for business should bring concrete results. The epitome of economic growth, according to Putin, is to improve the well-being of citizens. It is important to ensure the outstripping growth of their income, he noted. “The Russian economy must become an economy of high wages,” he concluded.