Putin outlines investment program to boost growth

MOSCOW: Russian President Vladimir Putin outlined yesterday a broad foreign and domestic investment program to boost slowing growth in the next three years.
Putin told a government meeting devoted to drafting budget frameworks through 2016 that Russia's social security system depended on broader growth.
The Kremlin chief had this week conceded that growth would fall short of the year's five-percent target and reach only 2.4 percent in 2013.
This tailspin has left Putin in a bind because it leaves the government short of the revenues needed to fulfill the vast promises he dashed out during his 2012 presidential election run.
"All our objectives, including social ones, can only be met based on high rates of economic growth," Putin said in televised remarks.
Putin said this growth can be achieved by attracting investment through favorable tax policies that made projects more lucrative than off shore bank accounts.
"We must create conditions that make it more attractive to investment in Russia than it is to hide them on some islands or spend them on luxury goods," he stressed.
Putin also proposed improving "budget transparency" and streamlining the tax system.
But one of his biggest concession came with an admission that the 23-trillion-ruble ($ 715-billion) military spending drive — an ambitious plan that envisions 400 new ballistic missiles and 600 extra warplanes — may have to be delayed.
Russia's highly-regarded former Finance Minister Alexei Kudrin was ousted in 2011 after more than a decade in government for arguing that Putin's military spending plans were too rich for the country's budget.
Military spending was one heavily promoted during Putin's election campaign and was meant as a prestige project showcasing Moscow's might in the face of Washington's dominant role in foreign affairs.
Putin suggested on Thursday that some of the more bloated state enterprises were simply not prepared to boost production of modern weapons even if they were awarded massive new contracts at this stage.
"If we see that somewhere they are not ready (to fulfill orders), then the Defense Ministry must come out with an initiative for assigning this money in a more rational manner," said Putin.
He suggest that spending could be expanded instead on education and the development of science.
Officials have been scrambling for months to devise a growth strategy that could function in a climate of steady to gradually falling world prices for Russia's exports of natural gas and oil.
Most at Thursday's meeting conceded that times for Russia at present were tough.
Finance Minister Anton Siluanov warned "that the budget for the next three years will be formed amid a reduction of the main parameters of social and economic development."
Siluanov cautioned that Russia's budget revenues would drop while expenditures remain the same -- circumstances that made life difficult for the government.

"Therefore, we must use all our resources," said Siluanov.
The finance minister proposed removing unnecessary tax loopholes and improving revenue collection.
He also suggested raising the dividend payments paid by Russian state-controlled companies.
Economic Development Minister Andrei Belousov stressed that Russia's new strict budget rules meant that "spending cannot grow in terms of its share of gross domestic production."
Russia has adopted a new budget rule that limits spending increases to the average global price of oil over a span of a few years.