The Government’s annual report to the State Duma

Mikhail Mishustin and State Duma Speaker Vyacheslav Volodin
“The Government of the Russian Federation: <…> shall submit to the State Duma annual reports on the results of its work, including on issues raised by the State Duma” (The Constitution of the Russian Federation, Article 114, Paragraph 1a).

Excerpts from the transcript:

Mikhail Mishustin: Mr
Volodin, Ms Matviyenko, Deputies of the State Duma, Colleagues,

Today, I am presenting the fourth
report about the Government’s activities. We have discussed part of its topics
in detail at meetings with the parliamentary parties.

I will focus on the results we
achieved last year, and on our future development priorities. 

I think there is no need to
explain in this hall the conditions in which all of us had to work. A sanctions
blow was delivered against Russia, one unequalled in force in recent
history.  

In the beginning, the West
attempted to assure everyone that the sanctions were not directed against
Russian citizens. There were no particular illusions on this score even then,
but now even a person unversed in global politics is aware that it is the
Russian people who are their main target. 

They
tried to bring down our financial
system so that people would not be able to use bank cards. They tried to
disrupt economic and business ties. They made their own companies leave the
Russian market with great losses, so that the goods we are used to would
disappear from the shelves, and to throw out Russian employees of those
companies on the street and deprive them of income. That is, the people whose
hard work created their multibillion profits. They wanted to provoke mass
unemployment and drastically decrease the quality of life in our country.

They
stopped at nothing: they blew up the Nord Stream gas pipelines, arrested bank accounts,
and banned Russia from the international payments system. They tried to block all
banking operations and all other economic activities.

Remember
what they said about the sanctity, the inviolability of private ownership. But
the property and money of our people and companies are being arrested just
because they are from Russia.

Last
year, we had to respond to challenges created by yet another package of
sanctions almost every day. They required a prompt response and a constant
search for an answer to the question: what will happen next? We were working on
countermeasures to protect the people, while at the same time laying the
foundation for the ability to move forward, ensure economic growth and reach
the national targets set by the President.

We
were doing this together with you. All branches of power, regardless of the
level – federal, regional and local – worked efficiently to implement tasks that
were crucial for the state. Thanks to our coordinated efforts led by the
President, we managed to deal with the most complicated issues of the past
year.

I
want to thank the State Duma, the Federation Council, regional heads and all
people of Russia who helped in each region and each municipality. We have
overcome all challenges together.

Last
spring, analysts predicted a double-digit fall of the Russian GDP. But we
survived.

It
was not easy. The decline, inevitable in this situation, was quite moderate.
However, we managed to bring the economy back to the growth trajectory.

Now,
even some international organisations are saying that we will see growth in
2023 and leave behind the developed economies in terms of GDP growth in 2024.

This
is not the first time that our economic system has shown such flexibility. In 2020,
amid the CIVID pandemic, it showed that it was more stable than had been
expected. We overcame that crisis more confidently than many Western countries
which saw a bigger drop of GDP.

In
March 2022, at the instruction of the President, the Government and the Bank of
Russia developed measures to stabilise the situation in the financial sector.

Due
to the prompt and precise actions of the Central Bank leadership, the work of lending
institutions and currency and stock markets was normalised. We avoided the
external blocking of transactions inside the country to a large extent due to
the existing national settlements infrastructure. The replacement of the dollar
and euro in our foreign trade has allowed us to expand operations with friendly
states.

Payments
for goods and services and money transfers are being made as usual. All bank
cards in Russia continue working. We managed to alleviate the inflation
pressure as well and maintain the stability of the banking sector.

Our joint
decisions formed the basis of a priority action plan to ensure economic
development in the face of external sanctions pressure.

It included more
than 300 measures which had been selected out of 33,000 proposals received from
all over the country. By June, the impact of negative factors had already markedly
decreased, and we approached the third quarter with a certain margin of safety.

Significant
funds were earmarked for the implementation of the plan. Direct support from
the budget and the National Welfare Fund alone amounted to 1.5 trillion roubles.

Almost 4
trillion roubles were allocated under various programmes for concessional
lending to companies, and that’s not counting VEB.RF guarantees for about 1
trillion roubles. We also restructured loans at floating rates and under the
Bank of Russia programmes amounting to about 6 trillion roubles.

The
implementation of these measures made it possible to promptly resolve the most
important tasks.

In implementing
them, we relied on primary data from all sources. We used reliable feedback
from people and businesses, which the President always reminds us to fall back
on. We created a new platform management model.

Modern
information technologies enable us to pursue a coordinated policy in all
sectors and the social sphere and support their development using budgetary
funds.

We work in close
coordination with the State Council, the Presidential Executive Office, the
Bank of Russia, public associations, companies and corporations.

We made it much
easier to do business.

Income tax rates
have been lowered for companies in a number of sectors. The cadastral value of
property for calculating payments to the state was frozen. Deferments were provided
on payment of insurance premiums and VAT was reduced to zero for hotel
services.

In addition, we
helped with working capital, primarily through a line of preferential loan
programmes. More than 1.5 trillion roubles were issued to major companies in industry,
agriculture, transport, energy and information technology.

Thanks to these
steps, businesses have been able to free up resources and channel them into
restructuring their production and logistics chains and adapting to the new conditions.

More than 200
licences and permits can now be processed through the public services portal
and, importantly, it can be done much faster than before, with less paperwork.

We
continue taking efforts to reduce administrative burden, with introduction of a
number of mandatory requirements postponed and over 2.5 million business
permits plus some 5 million driver’s licenses automatically renewed.

These
measures have allowed our citizens and companies to save over 300 billion
roubles.

For
Russian-based foreign organisations, we have simplified the mechanism for transferring
registration from the foreign to domestic jurisdiction in special
administrative regions on the Oktyabrsky and Russky islands in the Kaliningrad
Region and in the Primorye Territory, respectively. Over the past year, 83
companies have already re-registered in those territories, which is triple the
number compared to the previous period.

Solving
urgent tasks of economic stabilisation has allowed us to achieve, under the
current conditions, the national development goals set by the President, as
well as national projects, strategic initiatives, and government programmes.

In
2022, most national projects were executed at nearly 100 percent of the annual
plan, meaning that schools, roads and hospitals were built as scheduled.

We
have also re-launched the entire mechanism of state programmes. Digital
modernisation has allowed for a greater interaction between departments,
reducing the problem-solving period from 90 to 10-15 days. These results are also
close to 100-percent implementation.

The
Government has taken consistent efforts to focus its activities on 12
medium-term priorities in order to accelerate the economy’s adaptation to the
current challenges. I should emphasise that those include no secondary ones. I
will name them not in order of their importance but just as they are listed as
each one is equally relevant for the lives of our citizens and for our economic
development.

The
first priority: as I have already mentioned, last year’s key achievement was that
we maintained macroeconomic stability. The federal budget remains the core tool
for implementing all our plans. We have adjusted our policy in this area as
well, focusing on strengthening financial stability and reducing the impact of
the forced restructuring of economic ties on the medium- and long-term economic
potential.

Additional
funds were allocated for anti-crisis programmes aimed at providing affordable
resources, facilitating deliveries of imported equipment and parts, and
supporting basic industries and the most vulnerable groups of citizens.

I
want to thank all of you for promptly introducing amendments to the relevant
legislation. We have jointly drawn up and adopted a balanced three-year budget;
this is a socially oriented document and a development budget.

Yet another important priority is
developing the social sphere, primarily improving the quality of life and
wellbeing of Russia’s
citizens. Given the sanctions pressure and the resulting surge of inflation, it
has become the main trend in our work to support people’s incomes. Therefore,
following the President’s instructions, we used a special procedure on two
occasions – starting 1 June 2022, and then early January of this year – to
raise the minimum wage.  As a result, it
has increased by more than 13.5%. We did the same with the minimum living wage,
which has increased by almost 17%. This means that we have managed to preserve
the incomes of 15 million people.

I am referring, among others, to
families with children, who have found themselves in a difficult financial
situation. We are trying to make assistance to them as targeted as we possibly
can so that it can take life circumstances into account. As of 1 April 2022, we
expanded monthly payments to all needy parents with children aged 8 to 17 years.
It averages from 6,000 to 12,000 roubles per child per month depending on individual
situations. In this way we have given support to over 3.5 million families that
are bringing up about 5.5 million children.

Generally, we are making the
granting of all government support to people more simple and convenient and
based on social treasury principles. By now, we have converted to this format
31 federal social protection measures. This means that nearly 35 million people
will now receive targeted payments either automatically or based on a single
online application.   

We have preserved and expanded the
maternity capital programme, which has proved its effectiveness and relevance.   Last year, it was an important source of
support for 1.3 million families, which used these funds – more often than not
to improve their living conditions. And we began indexing it to the actual
inflation rate, not the forecasted one as in the past. Since 1 February of this
year, maternity capital has grown by almost 12% to nearly 587,000 roubles for
the first child and over 775,000 roubles for the second.

Now parents can use it to pay for
educational services for their children rendered by individual businessowners.

There are expanded opportunities for
using maternity capital funds to provide monthly payments. Families whose income
is less than double the living wage can receive them not only for their second
child but also all their children aged up to three years regardless of the
birth order in the amount of one minimum living wage per child per month.  

We have extended maternity
capital to cover the Donetsk People’s Republic, the Lugansk People’s Republic,
the Zaporozhye Region and the Kherson Region. In keeping with the President’s
instruction it can be available to all families in these constituent entities
of Russia,
whose children were born or adopted after 1 January 2007.

An important social trend is
providing care for older generations. In keeping with instructions issued by the
head of state, we adjusted the non-contributory pensions of unemployed old-age
pensioners by more than 8.5% in early January and by another 10% on 1 June.
Thus, their average amount increased by approximately 3,000 roubles to over
20,000 roubles.

Now let us talk about healthcare.

Preserving and strengthening
people’s health and boosting life expectancy are hugely important national
tasks.

All of us would like to see a
strong and modern Russia.
This means that people should always have an opportunity to get high-quality
medical treatment or have a check-up without a long wait. This should apply in
particular to elderly people and parents with children.

Last year, over 270 hospitals and
outpatient clinics were built, as were 700 rapidly erected medical and
obstetric stations and outpatient clinics.  Thorough overhauls were completed at 1,300
facilities, with 37,000 units of equipment supplied plus 2,000 ambulances and
4,000 vehicles for transporting doctors and patients.

We have increased availability of
high-tech medical assistance by adding eight new types offered at federal
medical organisations. Almost 1.5 million people took advantage of this
assistance free of charge last year (which is 10 percent more than in 2021),
including high-cost heart or vascular surgeries and organ and tissue
transplants. These are not just dry statistics, they represent the painstaking
work of top-notch doctors and the curing of many grave illnesses.

Following the President’s instruction, we made medical rehabilitation more
accessible. More than 1.3 million citizens underwent rehabilitation.

Previously, this type of care was primarily inpatient, and a person had to
go to hospital. Now it is available on an outpatient basis and in other formats
convenient for people. For this, over 150 regional medical organisations and
400 specialised departments were outfitted with all the necessary equipment last
year. Approximately 9 billion roubles have been allocated for this, and almost
2 billion more – to equip 28 federal centres. People across the country now have
additional opportunities to improve their health. We also intensified the fight
against socially significant diseases. Last year, 74 outpatient cancer care
centres opened in half of the country’s regions. Now there are such centres in
all the Russian regions. We are upgrading vascular centres and their primary
care departments.

During my report to the State Duma last year, I asked you to expedite the
adoption of the draft law on a unified register of bone marrow donors. I want
to thank you for promptly addressing this issue and for the lives saved. The
register was launched in September. It contains information about more than
190,000 donors, which is almost three times the number of entries in the
largest local register that existed before. We have never had such a
large-scale database before, each line of which is a chance for people to
recover.

Thank you!

Yet another important priority is
developing the social sphere, primarily improving the quality of life and
wellbeing of Russia’s
citizens. Given the sanctions pressure and the resulting surge of inflation, it
has become the main trend in our work to support people’s incomes. Therefore,
following the President’s instructions, we used a special procedure on two
occasions – starting 1 June 2022, and then early January of this year – to
raise the minimum wage.  As a result, it
has increased by more than 13.5%. We did the same with the minimum living wage,
which has increased by almost 17%. This means that we have managed to preserve
the incomes of 15 million people.

I am referring, among others, to
families with children, who have found themselves in a difficult financial
situation. We are trying to make assistance to them as targeted as we possibly
can so that it can take life circumstances into account. As of 1 April 2022, we
expanded monthly payments to all needy parents with children aged 8 to 17 years.
It averages from 6,000 to 12,000 roubles per child per month depending on individual
situations. In this way we have given support to over 3.5 million families that
are bringing up about 5.5 million children.

Generally, we are making the
granting of all government support to people more simple and convenient and
based on social treasury principles. By now, we have converted to this format
31 federal social protection measures. This means that nearly 35 million people
will now receive targeted payments either automatically or based on a single
online application.   

We have preserved and expanded the
maternity capital programme, which has proved its effectiveness and relevance.   Last year, it was an important source of
support for 1.3 million families, which used these funds – more often than not
to improve their living conditions. And we began indexing it to the actual
inflation rate, not the forecasted one as in the past. Since 1 February of this
year, maternity capital has grown by almost 12% to nearly 587,000 roubles for
the first child and over 775,000 roubles for the second.

Now parents can use it to pay for
educational services for their children rendered by individual businessowners.

There are expanded opportunities for
using maternity capital funds to provide monthly payments. Families whose income
is less than double the living wage can receive them not only for their second
child but also all their children aged up to three years regardless of the
birth order in the amount of one minimum living wage per child per month.  

We have extended maternity
capital to cover the Donetsk People’s Republic, the Lugansk People’s Republic,
the Zaporozhye Region and the Kherson Region. In keeping with the President’s
instruction it can be available to all families in these constituent entities
of Russia,
whose children were born or adopted after 1 January 2007.

An important social trend is
providing care for older generations. In keeping with instructions issued by the
head of state, we adjusted the non-contributory pensions of unemployed old-age
pensioners by more than 8.5% in early January and by another 10% on 1 June.
Thus, their average amount increased by approximately 3,000 roubles to over
20,000 roubles.

Now let us talk about healthcare.

Preserving and strengthening
people’s health and boosting life expectancy are hugely important national
tasks.

All of us would like to see a
strong and modern Russia.
This means that people should always have an opportunity to get high-quality
medical treatment or have a check-up without a long wait. This should apply in
particular to elderly people and parents with children.

Last year, over 270 hospitals and
outpatient clinics were built, as were 700 rapidly erected medical and
obstetric stations and outpatient clinics.  Thorough overhauls were completed at 1,300
facilities, with 37,000 units of equipment supplied plus 2,000 ambulances and
4,000 vehicles for transporting doctors and patients.

We have increased availability of
high-tech medical assistance by adding eight new types offered at federal
medical organisations. Almost 1.5 million people took advantage of this
assistance free of charge last year (which is 10 percent more than in 2021),
including high-cost heart or vascular surgeries and organ and tissue
transplants. These are not just dry statistics, they represent the painstaking
work of top-notch doctors and the curing of many grave illnesses.

Colleagues,

I would like to address the issue of children’s
healthcare separately. It is necessary to take care of the well-being of the
younger generation from an early age. This is a task not only for parents, but
also for us, for the entire state. After all, we all want our children to grow
up happy and healthy.

We launched a unique programme to expand neonatal
screening. It allows doctors to diagnose 40 congenital and hereditary diseases
at the earliest stage and immediately provide assistance and prescribe the
necessary treatment for a child. We are talking about saving the lives of
several thousand babies every year.

We purchased about 300 units of medical and laboratory
equipment worth almost 1.5 billion roubles and trained specialists.

Previously, this screening was available only in pilot
regions, but this year, we held large-scale neonatal evaluations throughout the
country. This programme will continue free of charge for citizens. Not only is
diagnosis important, but also timely treatment. As you know, a special
foundation called the Circle of Kindness was created, at the President’s
initiative, to help children with serious, rare diseases. It has been operating
for about two years. But in such a short time, it has already provided support
to more than 5,000 children.

In December, a very important decision was prepared
following the President’s instruction, which will allow even more young
patients to receive medicines paid for by the foundation. These are children
with so-called high-cost ICD diseases. Thank you, colleagues, for your support
and for adopting this law.

Now about education.

I will start with preschools. A few years ago, parents
had a hard time placing their child in a kindergarten. There weren’t enough
places. Due to the Government’s assistance, Russian regions have been building plenty
of kindergartens – almost 240 in 2022, and more than 1,000 over the past three
years. They will serve over 150,000 children.

To maintain this standard across Russia, we supported
the regions that had the biggest difficulties, the Trans-Baikal Territory, and the
republics of Buryatia and Ingushetia, by allocating 6 billion roubles. By the
end of this year, they will carry out major repairs of kindergartens that need
it. As many as 36 new kindergartens have been built. Places at preschools for children
aged 3-7 are now available all over Russia.

To provide them with opportunities to attend modern
schools after kindergarten, we are implementing presidential programmes to
build and renovate educational institutions. Last year, more than 1,500 school buildings
were renovated, and over 250 new ones built. But a school is more than walls
and new furniture. They need equipment, textbooks and other materials, and the internet.
We are providing pupils with all these things in every part of the country.

At the same time, we are updating the fleet of school
buses so that the children can safely get to their schools. More than 4,000
school buses have been procured. During my working trips, the heads of the
regions personally told me that school buses were crucial, especially in rural
and remote areas.

Colleagues,

The best achievement of Russian education is the children’s
victories. Russian teams annually participate in the eight most significant
international school Olympiads. Last year, they won 43 medals, mostly gold and
silver (32 and 11, respectively). This is the best result in terms of gold medals
in the last 10 years.

I congratulate these pupils from the bottom of my
heart. I am proud of them and of our country. It is especially gratifying
because this year has been declared by the President the Year of Teachers and
Mentors. And I certainly want to thank every teacher and mentor who prepared
the winners. They should get a large share of the credit for their pupils’
success because they have invested a lot of knowledge and effort in them.

It is important to create proper conditions for the
younger generation to engage in creative projects. To do this, we are modernising
children’s art schools. About 200 of them have been renovated, and 300 were
supplied with new musical instruments, equipment and educational materials to
make sure that the children who attend classes there could try various arts and
be exposed to culture.

On Saturday, we will mark the professional holiday of cultural
workers. I sincerely wish each of them all the best and every success.

There is much to say about the attention paid to
culture. I will briefly list several facts. New municipal museums are opening
across the country, and library collections are being replenished.

In 68 regions, 336 rural houses of culture were built
or repaired, and 23 Russian regions now have 80 mobile multifunctional cultural
centres so that people living in remote villages could watch films and listen
to concerts.

Young people aged 14 to 22 can use the Pushkin Card,
created at the initiative of the President, to see cultural achievements. By
the way, it has already been issued to more than eight million people.

In 2022, which was declared the Year of Cultural
Heritage of the Peoples of Russia, it could be used to attend over 200,000
events and watch over 600 Russian films. Every fifth person bought a ticket to
them with the Pushkin Card.

We allocated additional funds for domestic film
production. The total amount of financing amounted to more than 11.5 billion
roubles. Their box office earnings are growing and, by the way, reached their
peak over the past five years in January.

Our third priority is to ensure stability in the
labour market.

Like in all previous years, it was important for us to
protect people, their income and employment. In line with the President’s
instructions, we have adopted a whole range of measures, first of all,
expanding the opportunities for training and mastering new professional skills.
Nearly 200,000 people completed a training course.

We have re-launched the hiring incentive programme
with a focus on young people who tend to find it harder to find suitable jobs
due to a lack of experience. We reimburse organisations for the partial
remuneration of employees they hire, with seven billion roubles allocated for
this purpose. Last year, companies received applications for more than 150,000
jobs, and 26,000 people have already been hired. This practice continues.

We paid special attention to personnel matters in the
defence sector. We are attracting professionals from other Russian regions and
organising free training in the professions these enterprises need. We are also
providing relocation assistance. Last year, such assistance was provided to
approximately 7,500 people.

Due to this support, the unemployment rate went down
last year to a record low of 3.7 percent in December 2022 and 3.6 percent in
January 2023.

Despite a minor decline last year, Rosstat has
reported people’s real incomes resumed growing in the fourth quarter of last
year.

One more priority was to maintain people’s quality of
life and to satisfy domestic demand.

The panic buying in the first few months, when stores
were cleaned out, called for emergency solutions. People saw very soon that the
majority of basic necessities remained available. To attain that goal, we
lowered import duties on some groups of products and coordinated parallel
imports.

The package of measures adopted by the Government and
the Bank of Russia helped us to keep inflation down. We see that it is
approaching the target figure now.

The green corridor for imported goods has helped us to
prevent shortages. We have also prohibited the re-export of equipment,
component parts and medical goods. This has kept some 1,700 kinds of products
in the domestic market.

We saw that people were most of all concerned about
the potential shortage of foods. Many people today remember the food shortages
of 30-odd years ago. But our agricultural sector did its job well. Food
production increased by over 10 percent. The level of food security in Russia
is one of the highest in the world. Our domestic market has a surplus of grain
(177.8 percent against the 95 percent target stipulated in the food security
doctrine), sugar (103.2 percent vs 90 percent), vegetable oil (211 percent vs
90 percent), meat (100 percent vs 85 percent) and fish (153 percent vs 85
percent).

We had the largest ever grain harvest last year, even
compared to the Soviet period: 157 million tonnes, which is a big achievement
for our agricultural sector. We set new records in the production of oil crops
and increased the production of meat, potatoes, greenhouse vegetables, and
fruits.

We continue to develop our agriculture and to increase
production capacities in the main sectors. We have returned some 450,000
hectares of land to agricultural use and have built 25 fish processing plants.

This was largely made possible by the systemic support
provided to Russian agriculture thanks to your active support and involvement.
Total financing last year exceeded 420 billion roubles.

This approach allowed us to increase the funding of
rural areas to improve the quality of life for the people there. We built new
housing and roads and improved the territory. We will continue to help our
agricultural producers.

We continue to focus on housing issues.

A year ago, I said that we had built 93 million square
metres of housing, a record high in the history of our country, including the
Soviet period.

But in 2022 we built nearly 103 million square metres
of housing, and over 3.5 million families improved their housing conditions.

Of course, mortgages are the main instrument for
addressing housing problems today. Last year, three fourths of all home sales
in new residential districts were closed with the help of loans.

In response to the new economic environment, we have
upgraded the following programmes. We have extended the programme of subsidised
mortgages until the middle of 2024 and expanded the mortgage programme for
families with two underage children.

We continue to pull down housing stock that is unfit
for habitation throughout the country.

In 2022 we relocated 193,000 people from over 3
million square metres of derelict housing and allocated 43 billion roubles for
accelerating this programme.

As per the President’s instructions, we have launched
a new relocation programme, under which nearly 5,000 people in nine regions
have been relocated from 110,000 square metres of dilapidated housing.

To improve living standards in privately owned
housing, …

To improve living conditions for citizens in the private residential sector
such as villages and rural areas, we continue implementing the social
gasification programme which was launched at the President’s initiative. Over
the past year, gas lines were extended to about half a million homes. The
programme has now become permanent, bringing natural gas to more people’s homes
free of charge. We have also expanded this programme to schools, kindergartens
and hospitals.

It is important that people have the necessary infrastructure right where
they leave. With this in view, we are drafting a layout for the comprehensive
development of territories for years to come. Major construction covered by the
federal budget has been included in the Construction five-year state programme,
which is worth over 4.5 trillion roubles and includes thousands of facilities
such as motor roads, airports, research centres, healthcare and educational
institutions, and many others. We plan to complete work on more than 1,500
federal and regional projects.

We are also reducing the volume of construction in progress while
increasing the rate at which we complete new housing.

Last year, some 150 billion roubles were allocated as advanced financing.
In the current conditions, we have managed to utilise this scheme for the
construction of regional facilities: starting in May, Russian regions will
receive up to 180 billion roubles in financing.

To make citizens’ local travels convenient, we are making active efforts to
purchase new buses, trolleybuses and trams for towns across the country.

I would like to particularly thank Vyacheslav Volodin and Valentina
Matviyenko for their support in this regard.

The project to upgrade urban electric transport has become a worthy
addition to our work that has been implemented in ten Russian regions since
last year. Within the next three years, we will allocate some 100 billion
roubles to this end.

We also implement projects to improve public spaces, with more than 11,000
parks, courtyards, embankments and streets already upgraded, including those
chosen during the national competition for the best projects to create a
comfortable urban environment in small towns and historical settlements.

At the president’s instruction, we have doubled its funding to 20 billion
roubles and expanded it by inviting towns with the population of up to 200,000
to participate. This has resulted in another 80 comprehensive projects for
improving public recreation spaces to be implemented in 48 entities.

We should make our regions comfortable for travellers as well – all the
more so as domestic tourism is becoming increasingly popular in Russia, with
more than 60 million trips last year. Tourism is now among the fastest growing
industries, which has created about 70,000 new related jobs in the regions.

During the off-season, the tourism industry was helped along by the tourism
cashback programme. For the two years since its launch, nearly 4.5 million
people have taken advantage of this opportunity, with 18 billion roubles
provided in total cashback and another 14 billion roubles in cashback for
children’s holidays vouchers. During this period, more than one million
children enjoyed tours during their school holidays.

We will continue developing other tourist programmes for children as well.
Last year, a programme for support of school trips for pupils in years 5-9 was
launched jointly with regions, allowing 97,000 students from 18 regions to take
trips.

We can see that investors are showing major interest in tourist
destinations, as well as transport, logistics and construction; these two
sectors have a double-digit investment growth rate.

Our fifth priority. The Government sought to create
favourable conditions for private initiative and attraction of capital. As a
result, over the past 12 months, investment has continued to grow, by almost 5
percent.

We have achieved reasonable risk sharing between the
state and business. We have made precise adjustments to the package of support
measures. It includes infrastructure budget loans, a project-financing factory,
and public-private partnership mechanisms, as well as offset investment
contracts and special investment contracts.

I would like to separately address those investors who
have continued to do business in Russia despite the sanctions and pressure. We
have created all the necessary conditions for companies that see their future
in Russia, including for foreign businesses from unfriendly states.

Despite all the restrictions, the denial of property
rights, and the discriminatory measures that Russian businesses have faced in
the West, foreign companies have been operating comfortably here.

Russia is always open to lucrative projects. And we
will definitely support those who decide to implement them in our country. I
have no doubt that this will ensure mutually beneficial cooperation.

In cases where foreign companies discontinue the
management of their businesses in Russia, showing disregard for the future of
their facilities and employees, we will protect the interests of our people.

We will continue to support small businesses. This
segment provides a fifth of the gross domestic product and about a third of
jobs in Russia. SMEs were the first hit by the disruption of supply chains.
They needed help. The Government has provided them with almost 1.25 trillion
roubles worth of loan support, as well as preferential microloans at an average
interest rate of 6.5 percent. The preferential equipment leasing programme has
been extended. We have issued gratuitous grants of up to 500,000 roubles to
young entrepreneurs and social businesses.

We extended the insurance premium and tax payment
deadlines under the simplified taxation regime; that saved businesses more than
800 billion roubles. Companies with less than six employees and revenues below
60 million roubles are entitled to a new regime and can use an automated simplified
taxation system.

We have zeroed SMEs’ commission for transfers in the
Faster Payments System (SBP).

State-owned companies are now required to procure 25
percent of goods and services from small businesses. Moreover, the payment
period was reduced to seven working days, and the advance payment was increased
to 50 percent. As a result, SMEs’ sales have almost doubled over the past three
years, and exceeded 7 trillion roubles.

Colleagues,

The following two priorities include creating our own
production and ensuring technological sovereignty. They are closely
interconnected and can be addressed only as a bundle.

At the President’s instruction, the Government is
creating the necessary environment for developing advanced products and
technologies. These domestic solutions are required to ensure economic growth
and to improve the social sphere. We encourage the creation of hi-tech
production sites and the launch of major industrial projects. All-around state
support measures are yielding significant results in many key areas.

Speaking of the shipbuilding industry, two
large-tonnage Aframax-type tankers to transport refined petroleum products were
commissioned last year which is important. The largest and the most powerful
nuclear-powered icebreaker Ural sailed on its maiden voyage. This is the third
vessel of this class that was built to navigate the Northern Sea Route. The
Russian ice-resistant self-propelled platform which has been in the works for a
long time now becoming operational in the Arctic latitudes is another important
development.

These projects are unique in their own way since they
use the latest breakthrough technological solutions. It won’t be an
overstatement to say that our country can be proud of these achievements.

In the aircraft industry, we are creating a line of
modern aircraft and helicopters. Last year, aerodynamic tests of the upgraded
Sukhoi Superjet were completed in full and it will now be equipped with the
PD-8 Russian-made engines of the fifth generation instead of foreign units. Its
first flight is planned within the next three months. Flight tests of the
regional IL-114 and the Baikal light multi-purpose aircraft prototypes were
carried out successfully as well. The PD-14 engine and the MS-21 composite wing
were certified in December.

The decisions regarding the required amount of funding
for the industry have been adopted. It is now imperative not to slow down the
pace, which concerns the production line’s modernisation as well. In 2026, we
plan to produce over100 Russian aircraft of various modifications yearly.

In the automotive industry, we managed to not only
keep major domestic enterprises in business, but to launch new conveyor lines
as well despite sanctions-induced restrictions on supplies of necessary parts
and components and the fact that a number of foreign companies left our
country.

The electric vehicle production sites opened in Moscow
and the Lipetsk Region. The special economic zone of Alabuga, Tatarstan, began
to build light commercial vehicles that can be effectively used on public
transit lines.

With regard to railway engineering, we launched a new
site for manufacturing metro trains and, jointly with Belarus, trams in the
Nizhny Novgorod Region.

The machine tool industry is a priority area and a key
factor in achieving technological independence. Russia has unique competencies
in the manufacture of the bulk of modern metalworking equipment, including with
numerical control. Over the past year, the output of domestic machine tools and
instruments has increased by almost a quarter. We will continue to expand the
share of our products in the country.

In radio electronics, we have updated the programme
for promoting this industry and focused on forming our own electronic
engineering. Over the past three years, over 238 billion roubles have been set
aside to support this sector which made it possible to almost double Russia’s
share on the domestic market.

Factories to produce microelectronics, electronic
modules, printers, computers and peripheral equipment became operational. We
supported over 400 projects to develop electronic equipment, components and
means of production of electronic items. Almost 150 new projects were launched
in 2022 alone.

Additional power generating capacities were introduced
last year, and tens of thousands of kilometres of power transmission lines were
laid meaning that over 400,000 households, small and medium-sized enterprises
and industrial companies now have access to uninterrupted power supply.

Notably, a project to set up serial production of
Russian-made high-capacity gas turbines is in its final stage. The mechanical
engineering sector can now cover a significant share of the demand for oil and
gas industry equipment.

Light industry is expanding. Russia’s largest
enterprise for the production of knitted fabrics opened in the Ivanovo Region.
A modern high-tech textile production site is being built in the Nizhny
Novgorod Region. Several large projects for the production of nonwovens were
launched as well.

The pharmaceutical industry grew by more than 10
percent largely due to sweeping replacement of foreign products with
high-quality domestic medications. Last year, about 1,000 new medications and
more than 3,000 Russian-made medical devices were registered, all of which was
made possible by our researchers, scientists and companies.

We support the development of domestic software, which
is gradually replacing industrial foreign-made software. Almost 80 percent of
foreign solutions now have domestically produced counterparts. We are focusing
on quality now. This year will see major enterprises complete the launch of
pilot projects for the introduction of Russian computer-aided design systems,
as well as products that are required for data and process management.

Creating and implementing our own technologies and
solutions is among our top priorities. It is important to minimise our
dependence on imported equipment, parts and components, and software.

To finance this work, we
expanded and revived a broad spectrum of support mechanisms. The Industrial
Development Fund has a central role in this regard. It offers preferential
financing terms for projects to develop high-technology products, create new
manufacturing sites, equipment leasing, machine building, and digital
transformation.

Last year, we injected an
additional 120 billion roubles into its capital, bringing its total assets to
167 billion. This enabled the fund to grant a record-high number of loans.
Machine engineering companies, as well as enterprises from the chemical,
healthcare and pharmaceutical industries were the top users of these funds.
They have already put these resources to effective use.

To enable various sectors of
the economy to promote innovation, we need businesses, research institutions,
the government and development institutions to work together. We have
designated several high-technology sectors in which the Government, leading
businesses and state corporations will combine their efforts with a focus on
developing specific product lines. The state will help develop them, while it
will be up to the companies to bring them to the market.

Start-ups have a special role
to play in this regard. Business owners can come up with new, forward-looking
ideas. We need to help materialise them. We created an innovation support
registry for startups so that they spend less time applying for government aid
and waiting for it to arrive. As of today, this registry contains 11,000
companies and almost 1,000 of them have already benefited from state support.

Smaller companies can also
benefit from grants to implement AI solutions and fine-tune their products to
meet customer demand. We offer preferential three-percent interest rates for
projects to develop SMEs.

Last year, the President
proclaimed the Decade of Science and Technology, and we tasked our educational
system with helping us achieve technological sovereignty.

We have updated the list of
vocational training degree programmes, and opened 71 education and
manufacturing clusters as part of Proffessionalitet (vocational training
degree), a project to promote vocational training. More than 150,000 students
have already joined it.

We have embarked on a journey
to establish advanced engineering schools across 30 universities so that their
undergraduate and postgraduate students, and now school students, too, can all
contribute to delivering on the objectives our companies have. On 1 September,
over 2,000 young people started their studies at these institutions.

I would like to thank
Valentina Matviyenko for her important proposal to bring together science,
education and the employment market. In February 2023, the President signed the
federal law you, Ms Matviyenko, initiated to enable Russian research centres to
offer specialist degree programmes and give their students hands-on experience.
This was a very important undertaking.

We will continue the Priority
2030 academic leadership programme. More than 120 universities have taken part
in it. Last year, we earmarked about 30 billion roubles to create student
technology parks and business incubators.

World-class campuses of 25 universities will attract
talented young people. Efforts to build eight of them are already underway in
Tomsk, Moscow, Novosibirsk, Nizhny Novgorod, Yekaterinburg, Chelyabinsk, Ufa,
and Kaliningrad.

We have selected another nine projects: in
Arkhangelsk, Veliky Novgorod, Ivanovo, Perm, Samara, Tyumen, Khabarovsk and
Yuzhno-Sakhalinsk, as well as at the Sirius federal territory.

All of this is to ensure that students, including
foreign students, can study and live in comfortable conditions. And this is
when our students were expelled in unfriendly states simply for being from
Russia. We fast-tracked their enrollment into our universities: 2,500 people in
total.

Now on to another priority, digitalisation.

The largest foreign software suppliers left Russia
because of pressure from Western countries. Under these conditions, we have
strengthened support for our developers in order to ensure the self-sufficiency
of domestic digital solutions in line with the President’s instructions.

Preferential loans for IT enterprises are provided. We
exempted them from on-site tax audits and simplified public procurement
procedures. They will pay zero income tax for the next two years. As a result,
the number of accredited IT companies has grown. At the same time, the sale of
products and services in the industry increased by 22 percent last year.

We had a detailed discussion of solutions for the IT
industry during the previous report. There were a lot of questions. I gave
instructions to create a single domestic application store. The most important
element. Today RuStore has already been launched and replaced its foreign
analogues. Over eight million people have installed it to download various
banking services and games, as well as visit online cinemas and online stores.
Over 18 million downloads in total.

New, user-friendly forms of purchasing goods are also
emerging based on advanced technologies. Over the past three years, the number
of registered companies, for example, in the field of e-commerce, has increased
13 times. This is an excellent indicator.

The ninth priority was the development of transport
and logistics infrastructure. Over 22,000 km of roads were built and repaired
in Russian regions, including new ones, and 176 million square metres of tracks
were laid, which is 16 million squares metres more than previous achievements.
We improved on last year’s record results.

And we reached our goal on regional road standards two
years earlier than the deadline set by the President. More than 50 percent of
them have been brought up to code. This means that residents, tourists,
carriers will now be able to travel much faster and deliver goods to the
desired points along the Central Ring Road in the Moscow Region, and bypassing
Yekaterinburg, Maikop, Anapa and Kaluga. The Arkhangelsky bridge in Cherepovets
was put into operation, as well as two more bridges – road and rail – across
the Amur River.

The first 107 km of the M-12 Vostok motorway from
Moscow to Kazan have already been built.

The supply of Crimea was never interrupted, despite
the terrorist attack, and attempts to cut off the peninsula from the rest of
Russia. Let me note that the road section of the bridge was completely restored
in a remarkably short time: four and a half months.

Marat Khusnullin, Vitaly Savelyev and all other
colleagues were active in working with Governor of Crimea Sergei Aksyonov.

The Government pays special attention to the Northern
Sea Route, too. We have made navigation safer and more effective by creating a
new navigation management system. This, in turn, helped us increase shipments
along the Arctic routes. In 2022, they exceeded the target of 34 million tonnes
by 2 million tonnes.

Creating transport and logistics corridors is another
important element in our effort to open up our economy.

Promoting integration within the EAEU, as well as with
partner countries, is another priority. We have continued reinforcing
cooperation with friendly countries who share our views and values. Attempts to
shut us out of the global economic space through sanctions failed.

We have been proactive in expanding cooperation with
our partners within the Commonwealth of Independent States. Last year, Russia’s
trade with them increased by 6 percent.

Of course, cooperation within the Eurasian Economic
Union has been a priority for us. Here, we performed quite well despite all the
geopolitical tension. Our mutual trade was up 14 percent last year.

Within the Union State of Russia and Belarus, as well
as the EAEU, we focused on making our economies more resilient against the
backdrop of the unprecedented sanctions imposed on our two countries. We took
joint anti-crisis measures, which helped prevent shortages of equipment, food,
medicines, and medical equipment.

To increase trade even more, we are building an
independent financial system within our union. We also agreed to increase the
share of national currencies in our trade. Last year, they accounted for 85
percent, which is a very good result. We have plans to have even more trade in
our national currencies.

Overall, promoting international cooperation remains a
major policy objective for us.

Colleagues,

Russia derives its strength from its regions. For this
reason, developing them is among our priorities. We offer them new economic
development opportunities. Many regions have had to make serious spending
adjustments. Of course, the federal government was there to assist them,
cognizant as we are that all local projects must be fulfilled for the people to
benefit from them.

Over the past year, the Government has channelled
almost 4 trillion roubles to the regional budgets, which is almost 10 percent
above the level we had the year before that. This helped redirect these funds
towards building infrastructure and social facilities.

Of course, the situation varies depending on the
region. They may have different backgrounds, and quite often their economies
have little in common. And yet, in most of the regions, tax and non-tax budget
revenue increased by 13 percent, on average, to almost 15.5 trillion roubles.
We have been keeping a close eye on these indicators. However, this is just the
overall picture. We do understand this. We saw the biggest drop in the most
well-off, oil producing regions.

The overall economic environment played its part, too.
Today, we have additional opportunities for assisting all regions.

We devised a mechanism enabling us to substantially
ease the financial burden on the regions. In keeping with the Presidential
instructions, we stepped in to replace market borrowings with their high
interest rates by offering budget loans for a total amount of 720 billion
roubles. Government loans enabled the regions to save over 65 billion roubles
on debt servicing.

The Russian regions have also had the opportunity to
restructure budget loans they took out to cover their deficits. Last year, we
deferred their payments under these loans.

Thanks to these resources, the regions can do more to
support people and launch new projects for making their own economies stronger.

There are many things we must do on the ground. We
need to build a modern utilities infrastructure, upgrade housing, as well as
heating and water supply systems, and develop public transit.

It is for this purpose that we developed and put
forward a series of financial tools, including infrastructure budget loans and
bonds worth over 1 trillion roubles. There is also the programme for utility
infrastructure upgrades financed from the National Wealth Fund for an amount of
150 billion roubles.

These were all Presidential initiatives, and we
delivered on them. With them, the regions will receive additional resources for
delivering on their current agendas and creating better living conditions for
our people.

We continue implementing 10 programmes tailored to the
specific needs of the least developed regions in terms of their socioeconomic
indicators.

Last year, this helped create over 10,000 jobs and
attract over 75 billion roubles in investment.

Last weekend, we marked an
important day: the ninth anniversary of the reunification of Crimea
and Sevastopol with Russia. They are an inseparable part of our country today.
At the instruction of the President, the Government is taking measures to
improve the quality of life on the peninsula and implementing a social and
economic development programme.

In 2022, some 300 kilometres
of roads were repaired as part of the programme. Over 1,500 additional places
in kindergartens were created.

The number of investors in the
region has also increased. For every rouble of concessions provided to the
members of the free economic zone, there are three roubles of private
investment, which amounts to some 300 billion roubles. We will continue this
work.

Much was done to improve the
quality of life for the residents of the Far East and the Arctic zone in the
past year despite all external challenges.

The main issue is related to
providing them with better living conditions. The most popular initiative there
is the Far Eastern Mortgage programme. Last year, almost 26,000 families took
part in it. We have extended it to six years at the instruction of the
President.

Last summer, we launched
another important project, the Far Eastern Quarter. We discussed it in detail
during the working trip to the Trans-Baikal Territory. It includes  comprehensive construction of the necessary
social infrastructure in the cities of the macro region.

We have already selected seven pilot sites where over
two million square metres of housing will be built.

Two years ago, in your report to the State Duma, you
raised the issue of what we should do to prevent people from leaving the Far
East. Insufficient infrastructure is one of the obvious reasons. We have a good
tool called the Joint Subsidy, and we have also expanded it to the Arctic. This
mechanism provided the residents of Far Eastern regions with 1,200 improved
public spaces last year alone. We also opened a cardiovascular centre in
Yakutsk. Komsomolsk-on-Amur received the largest local sport facility, and
numerous other facilities have opened. All of them have been created so that
our people can access modern services.

People in the Far East consider regional flights to be
an important issue. Several years ago, they had trouble reaching neighbouring
cities, due to prohibitive prices. In 2021, we established the Joint Far Eastern
Air Company on the basis of the Avrora air carrier and launched a flight
subsidies programme. In the past 12 months, 355,000 people have taken advantage
of this programme. As instructed by the President, we have extended it by
another three years, we have nearly doubled the number of routes, helping
people who are often unable to afford air tickets, by keeping airline ticket
prices down.

At the request of my colleagues, I cannot help but
touch upon issues linked with the development of the North Caucasus. Its
regions have managed to boost economic growth rates by implementing
ground-breaking projects in the region’s key macro-economic sectors, including
construction of modern greenhouse facilities, and the development of tourism
and agro-industrial clusters. 

We have already attracted about 200 billion roubles’
worth of private investment for implementing these projects, and the federal
district’s residents have benefited from over 4,000 new jobs.

Efforts to meet economic demand for financial
resources and tools are the 12^th, but far from last, priority for
us. I have already listed many measures, while discussing our efforts to
support various sectors, to facilitate investment activity, the business
climate and to support our regions. Last year, all these measures made it
possible to create new pivotal economic sectors. However, our work continues
unabated. We should be clear-eyed: the foreign pressure on Russia will not
diminish.

Colleagues,

Last autumn, the
President signed an executive order establishingthe Government Coordination Council on the needs of
the Russian Federation Armed Forces, other troops, military formations and
bodies. It has been charged with a package of issues related to material
supplies for our defenders and also with improving coordination between the
federal authorities and the regions.

The real
requirements of our security-related agencies have been quickly checked against
the production facilities, and priority supplies and targets have been
coordinated. Producing enterprises have been helped to develop cooperation with
other producers.

This created
conditions for supplying the much-needed body armour, helmets and first aid
kits, as well as for meeting the requirements of the Defence Ministry and other
security-related agencies in weapons, military equipment and other products
they need. Decisions on some outstanding issues are taken very quickly.

To meet the
requirements, which have increased many times over, our defence enterprises are
expediting the implementation of investment projects. Funding for this has been
earmarked. The objective is to create new facilities and purchase additional
equipment and production tools.

We have reshaped
the operating schedule, introducing three working shifts at defence enterprises
where this as necessary. We have expanded industrial cooperation, including by
joining forces with privately owned companies and attracting research
institutes.

I would like to
say that we are grateful for your active involvement in the drafting of the
necessary laws. Thank you.

Amendments have
been made very quickly to regulations on contract service, and special economic
measures have been taken to ensure the implementation of the state defence
order. In particular, we have increased the number of acquisitions from sole
suppliers, simplified the pricing mechanism, and tightened responsibility for
refusal to sign contracts.

We have
seriously increased the production of the most in-demand weapons and military
equipment. We have formulated a package of support measures for the mobilised citizens
and their families.

We do not take
the mobilised citizens’ incomes into account when calculating means-tested
benefits to preserve the social benefits their families receive. Their children
enjoy priority in the school and kindergarten placement system, are the first
to receive recreation camp vouchers and have a special quota for bachelor’ and
master’s degree programmes free of charge.

The length of
service during the special military operation will be doubled for the purpose
of calculating the insurance pension. There are also programmes of medical
rehabilitation and psychological assistance and treatment at military hospitals.

It is also important
to create conditions under which mobilised citizens will continue to receive an
income from their private business. They can remain owners of their business. The
deadlines for tax, insurance and other obligatory payments and for submitting
business declarations and financial reports have been extended for mobilised
businesspeople. They can also apply for a payment holiday and a lease deferral.

Colleagues,

Last October,
the Donetsk and Lugansk people’s republics, Zaporozhye and Kherson regions
became an integral part of Russia. The President asked us to ensure their
integration in the single socio-economic space of our country.

We launched a
pension and social security system there with regular payments and benefits. I
want to thank all members of parliament for this work. The relevant legislative
acts were promptly adopted by the State Duma and approved by the Federation
Council.

This decision is
very important for over 1.5 million people who started receiving pension
benefits, and 1 million citizens who received social benefits and monetary
compensation.

We provided
support to the people whose homes were destroyed or damaged, and to those who were
injured as a result of hostilities.

Last year, we
started to restore infrastructure in the new regions to help them return to normal
life and activities.

We have already
completed work on almost 8,500 facilities, including residential buildings,
roads, utilities, outpatient clinics, hospitals, and schools.

The construction
of a water pipeline from the Rostov Region will be completed next week, which
will improve the quality of drinking water in the Donetsk People’s Republic.

We have repaired
about 900 km of roads, including the route connecting the new regions with
Crimea, as well as the main gas pipelines. As many as 3,500 power grid
facilities to bring light to people’s homes. All such utilities are already
technologically integrated into the unified gas supply and energy systems.

Our next task is
to reset the economies of these regions. The key industries in Donbass are
metallurgy, machine building, coal mining, and the chemical industry. The
agricultural sector can also become one of the main drivers of development and
employment in the future, especially in the Kherson and Zaporozhye regions.

Many industrial
and agricultural enterprises stopped operating there. It is necessary to
restore the main production facilities, and, where possible, to carry out a radical
modernisation. All the basic mechanisms of state assistance to industry that
are already operating in our country will help resolve the issues to some
extent.

We will
supplement them with special tax incentives. Tomorrow, at a Government meeting,
we will consider a draft law on creating a free economic zone in these
constituent entities and submit it to the State Duma. We count on your support
here.

The President
set a goal for the Government: to bring the new regions to the nationwide level
in all respects within eight years. In the near future, we will complete the
programme of socio-economic development.

Now I will tell you about the areas on which we intend
to concentrate our efforts this year.

The first priority is to provide the necessary
assistance to our military. At the President’s instruction, the Government has
begun creating a dedicated state fund for bringing targeted support to the
families of fallen fighters and veterans of the special military operation,
including legal, social, psychological and medical assistance, rehabilitation,
as well as assistance in finding employment and getting an education.

They should not encounter problems with anything. For
example, if a person needs cutting-edge medicines, medical devices or rehabilitation
technology, it is very important to provide these things quickly, without
delay.

The fund should begin operating within the next few
months, literally everywhere throughout the country. These people have gone
through a lot, and they need heightened attention and special care from the
state. And it will be provided.

Colleagues,

There are a number of other key tasks that need to be
addressed this year. All of them were outlined by the President in December.
There are six of them.

The first of these priorities is to strengthen
cooperation with our allies and find promising partners.

We believe that the development of trade, economic,
scientific and technical cooperation with China is very important. Following
the talks between President Vladimir Putin and President of the People’s
Republic of China Xi Jinping in Moscow, the two leaders adopted a joint
statement on the development of practical cooperation between Russia and China
in the medium term. As a follow-up, my colleague, Premier of the State Council
of China Li Qiang, and I will soon approve Plan 2030, which will embrace all
the main areas of cooperation with our Chinese partners.

This year, the Russian Federation is chairing the
bodies of the Eurasian Economic Union. We plan to take measures to increase the
number of joint projects in the energy sector, transport, and digital
transformation. We will focus on creating alternative supply chains and
improving our general investment climate.

To strengthen trade and cooperation ties, we need reliable
transport corridors, which are going to be built based on our export and import
needs. We will continue to develop the infrastructure of the North-South global
corridor, as well as in the Azov-Black Sea and eastern operation domains, which
are essential for supplying Russian goods to new markets.

The expansion of these corridors will boost international
traffic over the next three years by more than 30 percent.

By the end of next year, we plan to increase the
capacity of railways in the Eastern Operating Domain to 180 million tonnes.

Another crucial area of our activity this year remains the strengthening of
our technological sovereignty. I spoke about it in detail earlier. We must
ensure the presence of all the necessary products on the domestic market and
their full inclusion in the economy.

We will continue implementing projects to release competitive products.
First of all, in order to replace supplies from the unfriendly countries, we
will create new value chains while at the same time supporting them with budget
financing tools or a flexible customs tariff policy.

Within a month, we will prepare proposals on providing tax concessions for
purchasing Russian-made high-tech equipment.

The President set the goal of increasing the output of processing industry
products this year, as well as their share in GDP.

At the President’s initiative, we have launched the industrial mortgage.
Concessional loans for a total of 2.5 billion roubles for purchasing production
facilities have already been issued.

This year, as well as in the next two years, the volume of planned
subsidies is estimated at 300 million roubles. There will be demand for
industrial mortgages among industrial clusters. When we were making our trips around
the country, the manufacturers asked for it almost everywhere. First, this is
long-term money, and second, it is guaranteed demand. These are the two
elements we worked with.

As the popularity of industrial mortgages grows, we will increase funding.

As of now, given the high demand, we have made a decision on additional
funding. In the nearest future, an additional 1 billion roubles will be
allocated. We will expand this mechanism to the construction, modernisation and
renovation of production facilities. Almost all of them are in poor condition.

I want to reiterate that starting January, we have launched a new regime
for industrial clusters. One billion roubles have been allocated for expanding
the output of priority products. If this tool proves to be popular over the
course of the year, we will increase financing to 5 billion roubles, which we
have set aside in the budget.

We will also partially compensate the expenses for research and
development. Special attention will be paid to the production of liquified
natural gas, low and medium tonnage chemistry. These industries still depend on
foreign technologies to a large extent. In the next three years, they will be
provided with almost 37 billion roubles; 10 billion roubles will be allocated
this year.

Technology must
come to healthcare as well. We began developing innovative biomedical cell
products and tissue engineering. We have selected promising projects that have
passed preclinical studies and expert analysis. They will help treat major dermatological
diseases and musculoskeletal and spinal cord disorders.

The Government
submitted to the State Duma a draft law and, the day before yesterday, the Duma
reviewed it in the first reading. It provides for an expedited system for
circulating such products and the specifics of their use when custom-making
them for patients. Colleagues, I’m looking forward to your continued support.

We will increase
the production of blood plasma-derived medications. Their output grew by almost
20 percent last year. Over the next two years, we will triple plasma
procurement to 600,000 litres per year in order to fully cover our needs and
ensure our independence from foreign products. This was facilitated by the law
you passed earlier. To implement it, the Government approved a breakthrough concept
for promoting this industry.

It is important
to stabilise the IPI within the next few years. We expect it to grow by about 2
percent in 2024.

Russia’s financial
sovereignty is the third priority for this year. Access to Western resources
has been closed down, thus giving us a good opportunity to continue to develop
our own securities market and the banking sector, and to expand the toolset for
bringing long-term money into the economy. We plan to increase long-term
savings and the inflow of investment into the financial market. A single tax
deduction will be introduced to increase the appeal of new mechanisms.
Corresponding amendments to the legislation are under development.

We will encourage
the fast-growing technology companies’ efforts to raise funds.

Fourth, we will
continue to expand the necessary transport infrastructure throughout the
country using the advanced financing mechanism where the regions receive the
resources that were set aside in the budget for later periods in order to build
motorways faster.

The sector is
still facing many challenges. In order to effectively and consistently overcome
them, we approved a five-year plan of roadwork. The total amount of funding
stands at almost 13 trillion roubles. This sector hasn’t seen such a
large-scale programme in the last 30 years.

This money will
be used to build and bring up to code about 140,000 km of roads, including the core
network, which bears the main flow of passenger and freight traffic.

I propose focusing
on the road infrastructure that ensures access to social facilities. Its
construction and renovation continue.

The regions need
to create and restore mass transit routes that allow residents of remote areas
to get to the hospital, cultural institutions, educational organisations and
other important sites.

We will also increase
infrastructure budget loans.

Another 250 billion roubles
will be added to the already issued amount of one trillion roubles for renovating
housing and utilities as well as for transport and social facilities, with 100
billion designated for our Far Eastern regions.

At the President’s
instruction, the Government will allocate 50 billion roubles of budget loans
for modernisation of public transport by using advanced technologies, and 15
billion roubles for oil boilers to be switched to biofuel. These amounts have already
been formalised in legislation. Last week, the State Duma adopted the law which
has been signed by the President.

Mr Volodin, Ms Matviyenko, thank
you for your personal efforts in providing legislative support for the President’s
initiative.

We have launched a comprehensive
programme for utility infrastructure modernisation financed through the National
Wealth Fund. Under the programme, 1,300 facilities will be built or renovated within
the next two years, including engineering networks. This will substantially
improve living conditions for over 19 million people in most Russian regions.

At the President’s
instruction, additional 130 billion roubles are envisaged in the federal budget
for this period to finance regional programmes for upgrading the utility infrastructure.

The fifth objective for this
year is to improve the wellbeing of citizens, including by consistently
increasing the monthly minimum wage at rates above the inflation level. At the
President’s instruction, the minimum wage will be indexed by 18.5 percent
starting 1 January 2024.

Particular attention is paid
to employees in the public sector of the economy. Our school and university
teachers, medical workers and other medical personnel, employees in the social
and cultural sectors, as well as in science, should receive adequate pay for
their hard work. To this end, we provide assistance to regions to bring their
salaries in line with the President’s May Executive Order.

We will keep in place the
existing measures of supporting the most vulnerable groups of citizens. Starting
1 April, social pensions will be increased, which will be in addition to the
indexation carried out last June. This assistance is provided to citizens who lack
the required years of service for receiving insurance pension. Within just one
year, social pensions will be increased by more than 13.5 percent, which will
allow for higher pension benefits for about 4 million people.

We are essentially improving
the social protection system to provide support promptly and in full, in a
convenient format without bureaucratic delays.

It is the
state’s obligation to take care of citizens and prevent situations when people
have to knock on every door to exercise their integral rights. This is why we
created a new institution this year – the Pension and Social Insurance Fund. We introduced a
unified social contribution rate. As a result, by 2025, sick leave, maternity and
childcare allowances until the child reaches 18 months will increase by more than 50 percent. It was a very
smooth integration. Ms Golikova and her colleagues did a meticulous job. Nobody
even noticed the consolidation of the two funds – even though it was not easy.

For a regular
person, the source of their pension or benefits and the agency in charge do not
really matter. The important thing is that the payments arrive without delay. Entrepreneurs
appreciate transparency and clarity of their contributions. The new Pension and
Social Insurance Fund will take care of it by optimising and centralising all
management and accounting.

In his Address
to the Federal Assembly, the President instructed us to launch a special
concessional rental housing programme for defence industry workers. Subsidised
by the state, their rent will be significantly below the market. This
opportunity will be available in the cities where defence is the backbone
industry or where major industrial and research facilities are located.

Also in the next
three years, we will allocate additional funding for housing certificates for
young scientists.

I want to
briefly speak about the migration policy. It is a crucial issue and a matter of
domestic security. Speaking at an expanded meeting of the Interior Ministry
Board recently, the President noted that it is important to review such matters
in all their complexity and estimate what professionals and in which regions
and industries are particularly in demand, and what are the qualification and
skill requirements. All administrative procedures must be transparent. We will
develop respective proposals and present them to the President.

Currently, the
Government is working on an extremely important bill that will determine the
state migration policy. All opinions must be taken into account to fulfil the
tasks set by the President successfully.

At his
instruction, we will also promptly take measures to move the applications for
citizenship, permanent residency and work permits online and make the
procedures as convenient as possible.

Now to the
Government’s main objective, which is preserving the population. An important
aspect of these demographic efforts is maternity and childhood protection.

We will continue
to increase the effectiveness of compulsory healthcare insurance, making modern
and quality medical services more accessible.

The President
instructed us to draft proposals on improving assistance to families with
children in need. We are developing an integral state support system for them,
from pregnancy support to the time the child turns 17. We have been working on
this system for the past two years. Now the work is done and this year, we will
be able to launch a unified monthly maternity and childcare benefit, payable to
about 10 million beneficiaries, both pregnant women and children aged 17 and
younger.

Family support goes
beyond relieving financial troubles. Every person must have access to the entire
scope of life support conditions, including quality healthcare, excellent education,
good business opportunities and convenient public services. We will continue
addressing these matters together.

Colleagues,

Last year saw
the start of a deep transformation of the world order. More and more countries
come to realise that a fair world of the future is incompatible with the rules
imposed by the collective West. Transition to multipolarity is gathering speed.
Russia is at the cutting edge of this process.

We are
experiencing fierce strategic competition. Essentially, we are fighting for the
right to choose our own path based on our national interests and for the
benefit of our people.

The year 2022
was a complicated period of adaptation and reinventing economic links. As I
said at the beginning, the economy has now returned to its growth trajectory.
It is important to protect its stability and engage all available resources to
make our country even stronger.

The President
set specific tasks to achieve this goal. I am confident that by working
together, we will succeed.

Thank you. I will
take your questions now.