Vladimir Putin met at the Kremlin with the Group of Twenty Finance Ministers and Central Bank Governors. Russia is currently chairing the G20.
The situation in global finances and the G20 countries’ actions to stimulate global economic growth and restore confidence in financial markets were the main subjects of discussion.The G20 summit will take place in St Petersburg on September 5-6.
President of Russia Vladimir Putin: Good afternoon, ladies and gentlemen, friends, colleagues,
It is with pleasure that I welcome to Moscow the Group of 20 Finance Ministers and Central Bank Governors.
We see today’s event as a major stage in the preparations for the upcoming G20 forum that Russia will chair. The global economic situation clearly calls for our responsible and consolidated efforts. The time when crises were local and isolated in nature is in the past now.
Financial problems in a number of the world’s big economies are affecting the global economic situation. It is not possible to shut oneself off and stay outside the global economic processes. No country can face today’s challenges alone.
This places tougher demands on our global governance institutions and calls for closer coordination of economic policy. Adjusting the institutions and creating effective new instruments for eliminating the imbalances that have built up and stimulating growth in all parts of the world – these are the main tasks for the G20 and for Russia’s presidency.
When the crisis was at its peak the G20 countries agreed on coordinated economic support measures, both at the individual country and international organisation level. It was the G20 that brought in tough restrictions on trade protectionism and gave a new impulse to trade talks, drafted new financial regulation rules, and began talks on reforming the international financial organisations, in particular the IMF.
The G20 has concentrated a lot of attention on facilitating sustainable development over these last years, promoting green growth, which focuses above all on high environmental standards and people’s quality of life.
The main challenge today is whether the G20 will be just as effective in resolving long-term development tasks, and whether we can continue a policy that will pull the global economy out of stagnation and uncertainty and set it on a steady growth track.
Russia proposes focusing the G20’s agenda on the forum’s main tasks: achieving balanced growth and creating jobs. Our priorities are to encourage investment, increase transparency, and make regulation more effective. These priorities make it possible to unite all areas of the G20’s work in order to reach the set objectives.
In the context of these priorities, we propose discussing development of capital markets and the financial investment instruments used in global trade, and also examining regulation of the financial sector and its infrastructure at the global and national levels.
Employment and job creation, including for vulnerable groups of population, are also important items on the agenda.
I hope that your meeting with the labour ministers in July this year will be of help in resolving this issue. This meeting is one of the Russian presidency’s innovations, and I want to tell you that it was in response to trade union leaders’ requests. They came to me with such a proposal. We discussed the matter together at Los Cabos with the other G20 leaders, and in principle no one had any objections to starting work along this track.
Overall, as we see it, all of the issues on the agenda we have proposed are closely interlinked and complement each other. For example, creating a good environment for investment growth automatically includes adjusting financial instruments, carrying out structural reform, and fighting corruption.
The investment issue is also closely linked to another of our financial priorities – managing state debt. The situation in this area is complicated today. The debt burden already exceeds GDP on average in the developed economies. It is not fully clear how countries will service their debt. This makes investors cautious of course, and countries end up in a vicious circle of debt and economic crises.
It is our firm belief that only by following a clear and transparent policy to manage fiscal deficits and state debt can countries win the necessary confidence from investors. Investment, transparency, and effective regulation are thus issues that concern all items on our agenda.
Colleagues, I note too, that the agenda Russia proposes aims to continue the work that was already begun. We will continue to implement the agreements on creating a fairer and more risk-resistant financial system. In this respect I think that the Seoul G20 summit’s decisions on reforming IMF voting quota distribution should be carried out.
We hope that the G20 will agree at the upcoming Russian summit on a new formula for calculating quotas that will fully reflect the balance of power in the global economy today.
Other important steps include introducing new banking standards and tightening supervision of financial institutions of global systemic significance and the shadow banking sector, and also developing the Financial Stability Board’s potential as a full-fledged international body.
I stress the point that the issues Russia has proposed reflect Russia’s own domestic social and economic priorities. This is something I discussed yesterday with our colleagues from the OECD.
We have intensified our efforts over these last years to make investment growth the main driving force in our economy. Our structural reforms are making good progress. Together with the business community we are pursuing a national business initiative to follow ‘roadmaps’ for improving the business climate, reduce administrative barriers, and simplify access to financial resources. At the same time, we are continuing to develop our stock market infrastructure and are putting in place good conditions for institutions that can put ‘long money’ into the economy.
One of our promising initiatives is the project to create a mega-regulator that will merge the Russian Central Bank and the Federal Service for Financial Markets. The new regulator will be tasked with raising financial regulation standards and strengthening market actors’ confidence. We also continue to pay full attention to budget stability issues, of course. Russia has one of the lowest state debt levels in the world.
We continue to target inflation. Inflation in Russia is relatively high compared to many countries, including your own, but last year and the year before we nonetheless managed to bring inflation down to its lowest ever level in the last 20 years.
We hope to continue this policy this year and in the medium- and long-term perspective. We will keep to a very balanced, responsible and conservative policy in state finance issues.
In this context I note that the so-called ‘budget rule’ went into effect in Russia this year. It is designed to make our budget less dependent on oil prices. We are aware of our problems, and we know that one of the big problems in this area is the high oil and gas deficit. We will work consistently on bringing it down and making the budget process more predictable.
Colleagues, over the next two days you will discuss the main areas in budget and financial policy in the world’s biggest economies. The G20 is above all your forum, your organisation. It was established so as to give specialists of your level and class the opportunity to get together, discuss the issues, and propose solutions to your countries’ leaders.
I wish you fruitful work. I hope that your discussions will produce the effective solutions and recommendations that we need and that will form the foundations for work at the G20 summit in St Petersburg in September.
Thank you for your attention.
Ladies and gentlemen, I want to ask you a question.
If anyone present here would like to add something or voice any ideas, present suggestions on how to organise our joint work for the upcoming period until the heads of state and government meet in St Petersburg, or make a comment on the topic at hand, please, go ahead. Nobody?
Ok. Then I will summarise some of the points of this brief discussion. Indeed, this was not so much a discussion as a series of short presentations, and I am very grateful to you for preparing them. I think the World Bank Chairman expressed some very good ideas that should help us find the right direction in our work, and in general, his words sent a very good signal. He said, “The worst part of the crisis is behind us.” Like we in Russia say, may your words come true, Mr Chairman! Let’s hope that the worst part of the crisis is truly behind us, as you just said.
In this respect, in concluding today’s brief meeting, I would like to say the following. Naturally, the main political decisions at international forums, and in each of our nations, are taken specifically at the political level by presidents and prime ministers. But when it comes to the economy, a leader – any president or head of government or prime minister – cannot make decisions without relying on your professional opinion regarding a whole range of very sensitive professional, special issues.
It is unlikely that any of my colleagues – heads of state or government – will allow themselves to argue with you on purely professional issues, and those are precisely the issues that usually underlie the political decisions. I want to stress that we are all placing high hopes on your joint work.
I will express my own position on a key matter. I agree with our German colleague, who stated that what is happening now is a problem of trust. But this problem stems from the systemic failures in the previous regulatory system. And investors will never be satisfied with any additional money injections or more printing presses, if they do not see that the conditions that would prevent any new crisis developments from happening have been created.
And naturally, first and foremost, we need to think about how to do this. At the same time, in making decisions, national leaders – prime ministers, presidents – always have to take into account two aspects: the necessity and the ability; the necessity to make particular decisions and their ability to implement these decisions based on political, social, and other factors.
Thus, I call on you to not just think about what absolutely needs to be done from a professional point of view, but also consider what can be implemented given the conditions of our life today: in each of our nations and in the global economy overall. This should be based on the principles of transparency and justice – justice in international relations in the economic sphere, and justice in the social sphere between certain groups of population in our nations. I would like to wish you success in doing so.
Thank you very much for coming to Moscow and thank you for your efforts to address urgent and very difficult issues.
Goodbye and good luck!