30 May 2004 15:02
Russian Deputy PM Zhukov stresses welfare, lower inflation, higher GDP
Russian Deputy Prime Minister Aleksandr Zhukov has defended the government's policy which will see various
benefits in kind replaced with a cash equivalent. Most of those entitled to them, he said, stand to gain from the
introduction. In his comments in Russia TV's "Zerkalo" interview slot, hosted by Nikolay Svanidze, on 29
May, Zhukov said that the aim was to lower inflation to the level of 3-4 per cent by 2008, and to halve poverty. The
following is excerpted from Zhukov's interview, with subheads added editorially:
[Presenter] This is "Zerkalo" on the Russia TV channel. Russian Deputy Prime Minister Aleksandr Zhukov is
in the studio.
Earlier this week, the president delivered his annual address to the Federal Assembly, in which he set several
specific economic objectives directly related to the standard of living of most Russians.
[Passage omitted]
Benefits: a "fairer" system
Today, Finance Minister Kudrin said that a draft law to replace concessions [benefits in kind] with compensation
payments will be tabled before the State Duma on Saturday. To this end, R170bn will be allocated in the budget
additionally next year alone. To what extent will this change affect the lives of millions of our pensioners?
[Passage omitted]
[Zhukov] I agree that this issue is now something that each of those in our country who is in receipt of some kind of
benefit in kind is concerned about. It is quite obvious, however, that the benefits system that has taken shape and is
in place today, benefits in kind, is more than a little unjust. The fact is that people that are entitled to the same
category of concessions are, in fact, in receipt of a totally different range of benefits, which depends of where they
live. For the rural population, for instance, most of these concessions are inaccessible. [Passage omitted]
To make the system better, clearer and fairer, the government proposes that concessions should be replaced with
compensations in cash. Clearly, most of those entitled to concessions will gain from this. There is no doubt about that.
[Passage omitted]
[Presenter] Is it not so, Aleksandr Dmitriyevich, that a cash equivalent is attached to all these concessions?
[Passage omitted]
[Zhukov] I can give you the overall figure. At present, cash concessions for the population, for all categories of
those entitled to concessions, are worth a total of some R40bn. By way of compensation, the government is ready to
provide a cash sum of R170bn next year, which is more than four times the former figure. [Passage omitted]
[Presenter] How many people [to be affected by the change - war and labour veterans and invalids] are we talking
about, roughly?
[Zhukov] Roughly 12 million people. [Passage omitted]
GDP, inflation
[Presenter] Is it in your view realistic to double GDP by 2010?
[Zhukov] It is, in my view, a realistic target. It will be of course far more difficult to fulfil the objective to
retain, throughout the period, the rate of growth that we had in the first quarter of 2004.
[Presenter] What was that rate?
[Zhukov] It was 8 per cent. It is a very high rate of growth, which will be not at all simple to keep up. In part, it
is of course due to the high oil prices and the fact that the markets favour our country a great deal at the moment.
Here, our task is to adjust the quality of growth and take advantage of this favourable situation so as to develop the
sectors of industry that will enable us not to depend so much on the fluctuation of oil prices. We are working towards
this, but it won't happen overnight and is quite difficult to achieve. It calls for a structural manoeuvre which
will allow new, innovative technologies, industry and other sectors to be introduced or developed. [Passage omitted]
As for inflation, the government and the Central Bank will of course, as one of the central aims of monetary and
credit policy, aim gradually to lower it. This, after all, also has a social dimension. [Passage omitted]
Therefore, it is obligatory for us to continue to lower inflation. This year, for example, it will probably be no
more than 10 per cent. Next year, it is expected to fall to 8 per cent, and then to 4.6 per cent by 2006 and, I think we
will be able to bring it down to this figure, some 3-4 per cent by 2008.
[Presenter] The issue here is this: [passage omitted] is it possible to combine steps to speed up the economy and to
lower inflation?
[Zhukov] It is both possible and necessary. The fact is that it is extremely difficult to speed up the economy with
inflation at over 10 per cent, because the higher the level of inflation, for example, the more expensive bank loans
are. So now, as we are about to launch a housing construction programme, to build cheap, affordable housing, high
inflation will simply cause this housing to be as expensive as it is now. For it is simply an impossible situation to
borrow money on a mortgage basis at annual percentage rates of 15 or 20 per cent, as there is a direct link there to the
rate of inflation. [Passage omitted]
Oil prices, poverty reduction
[Presenter] How ready is our economy for a drop in oil prices?
[Zhukov] The government has put in place all necessary mechanisms for us to have both a balanced budget and the
possibility to press ahead with our spending on social projects at the same rate even if there is a substantial drop in
the level of oil prices. With that in mind, we have formed the necessary reserves in the form of a stabilization fund,
to provide for precisely this eventuality. [Passage omitted]
[Presenter] The gap between the standard of living enjoyed by the top 10 per cent and bottom 10 per cent of our
population is enormous. [passage omitted] Is anything being done about that?
[Zhukov] It is precisely one of those things the president talked about, which is poverty reduction. The aim is to
bring down the number of those who live below the poverty line. This number, in the past four years, has fallen by a
third. Nevertheless, the income of some 30 million people is at present less than the subsistence minimum.
So the three-year government programme calls for the number of those in this category to be halved.
[Presenter] Do you believe this to be realistic?
[Zhukov] I think that this is realistic. This is based on our economic growth projections, on the potential of our
budget, greater by the year, and on our current job creation programme, which is one of this government's main
aims. [Passage omitted]
[RTR Russia TV] |
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