ST PETERSBURG, Vladimir Putin pledged on Saturday to widen Russia's anti-crisis aid package with a car scrappage scheme and mortgage support to jolt the economy out of the worst recession in 15 years.
By Gleb Bryanski and Denis Pinchuk
Putin, who now serves as Russia's prime minister after eight years as Kremlin chief, vowed to restore boom-time levels of economic growth after an 8.0-8.5 percent decline in gross domestic product this year.
Speaking to members of his United Russia party at a congress in St Petersburg, Putin said he saw a rise in cargo turnover and electricity demand in 2010, two key indicators of economic activity. He did not mention taxation policy or interest rates.
"The decline in GDP by the end of the year will not be as big as we thought -- the figure of 10 percent or even more was calculated -- it will be less: about 8 or 8.5, but that is still a great deal," Putin said in a speech lasting more than an hour.
His remarks followed a brief opening speech from President Dmitry Medvedev lasting around 10 minutes which concentrated on the need for United Russia to modernise and largely avoided the economy.
"In the next 2 to 3 years, we must not only fully restore the pre-crisis level of the economy -- this is of course essential, as it is also with people's incomes -- but more importantly, also achieve major changes " said Putin.
A decline in annual GDP of 8.0 to 8.5 percent would be Russia's worst economic result since 1994, when the economy, trapped in the chaos which followed the 1991 fall of the Soviet Union, contracted by more than 12 percent.
Alexander Shokhin, who heads Russia's main business lobby, the Union of Industrialists and Entrepeneurs, said after the speech that tax reform should be a priority for the government.
"As a representative of business I have heard less about taxes than I would like to hear," he told Reuters. "In particular, we believe that even in the crisis conditions we should not postpone tax reform until 2012-2013."
Shokhin added both tax and customs reform were necessary to achieve the prime minister's goal of increasing Russia's economic competitiveness.
As Kremlin chief, Putin presided over an economic boom fuelled by high prices for natural resources, soaring domestic demand and massive foreign borrowing by some of the country's richest businessmen.
MODERNISE
The former Kremlin chief said Russia would widen its anti-crisis programme for carmakers and that he was sure ailing carmaker AvtoVAZ had a future. He added Russia would help firms buy high-technology assets abroad.
But the premier said AvtoVAZ, which makes Lada cars, would have to modernise and he hoped shareholders -- which include France's Renault -- would behave responsibly.
He said Russia would pay 50,000 roubles ($1,049) to those car owners who agreed to trade in vehicles over 10 years old for new domestically made cars.
Russian Technologies head Sergei Chemezov told reporters after the address he was "delighted" to hear Putin's vow of continued government support for AvtoVAZ, in which his state company holds a 25 percent stake.
The company, which also controls the bulk of Russia's defence sector, has asked for more government funds, he added.
"We are asking the government for support in many sectors. Recently we have asked the government to support the ammunition-making sector. It is the most complicated loss-making sector," Chemezov said.
Putin also said Russia would support the mortgage market with 250 billion roubles of support in 2010.
Speaking on energy, Putin said Russia would start pumping oil through a major pipeline to the Pacific in a month.
He also said Russia aimed to unite the country's Asian and European gas transport systems, a step that would give Moscow more ability to move gas between clients in the two continents.
(Writing by Guy Faulconbridge and Alfred Kueppers; editing by Michael Stott and James Jukwey)
Russia (Reuters)