Key problems draw fire

Government discusses strategy for H2 at Council of Ministers’ sitting

By Irina Yemelyanova

Many topical proposals have been discussed, making it clear that no more empty-headed privileges, credits, subsidies or other state injections will be allocated to different programmes and projects. Much money has been printed which is not actually earned and is simply inspiring inflation. Prime Minister Mikhail Myasnikovich did not flinch from stressing that certain projects have been paid for with state funds with little return. This year, some regions have launched construction without sufficient financing, probably hoping that state funds will be forthcoming, regardless of efficiency. In fact, every third borrower is defaulting on their loan — with nobody bearing responsibility. The PM has promised to introduce responsibility, while conducting a pre-scheduled staff certification.

Deputy Prime Minister Sergei Rumas notes that, in the second half of the year, domestic consumption should fall, with its structure changing: less TV sets are likely to be sold but more products. With this in mind, industrial enterprises should enhance exports, avoiding excessive warehousing, with the construction branch having the same targets. Contractors now primarily need to complete near-ready sites. The Government is convinced that, if company heads demonstrate deftness, sales markets can easily be found — as export conditions are currently favourable. Meanwhile, the Prime Minister has warned that ‘this won’t last forever, so sluggishness is inadmissible’.

The problem of investments was tackled very seriously, without any ‘slogans’; to be more correct, the lack of injections was in focus. Of today’s $750m of direct foreign investments, 70 percent are foreign company profits, which are yet to be taken away by investors. Attracted investments stand at just 11 percent, with the private sector accounting for 92 percent of this. As regards state companies, Mr. Rumas stresses that, over the past two years, only one investment agreement has been signed by the Industry Ministry.

The heads of Government also focused on foreign currency, which cannot be bought freely by citizens, resulting in ‘grey’ schemes. Secondly, the plurality of exchange rates is encouraging enterprises to hold export revenue abroad, as they don’t wish to sell it at the National Bank’s exchange rate. Alternatively, they convert it into a foreign currency not subject to obligatory sale. During the sitting, it was decided to put an end to this…

In the second half of 2011, the Government plans to focus on exports, inflation and investments. Meanwhile, as Mr. Myasnikovich noted, people’s problems remain key. “Whatever tasks we might solve, please remember that people’s standard of living is of primary importance. Our work must be guided by this. In 2011, citizens’ real incomes should be no lower than last year,” the Prime Minister added.

Everyone agrees but action is required…

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