Briefing of Alexey Ulyukayev on the results of the 29th meeting of the Consultative Council on Foreign Investments in Russia



Alexey Ulyukayev: Good afternoon, Dear Colleagues. The annual session of the Consultative Council on Foreign Investments has been just closed. It was preceded by much work in the course of the year, and appropriate previous session instructions were fulfilled. Today, we have summed up our progress in this direction. Prior to that, we held an Executive Committee meeting, and in the morning we had a briefing for the FIAC participants. Today, the discussion continued under the leadership of the Prime Minister.

Unlike last year, when there was a lot of emotional conversations on the topic that sanctions would create new conditions and we would need to find ways to adapt to them, to separate politics from economy, today’s conversation was quite different and practical. Today, all of us know how to work in practice. The first shock went away. The investment are being made, foreign business is continuing to work in our country, so we have talked more about practical things, such as how to combine the substitution and the active work of foreign investors; how we can work out here information interaction, provide legal protection; what is "national producer" and how to get this status of the national producer; the degree of localization of production, the possibility of using these localized industries in the framework of the legislation on public procurement, pursuant to Federal Laws 44, 223. Traditional question – it's various types of non-tax encumbrances, charges, primarily relating to environmental legislation, solid waste and water supply, and water purity requirements.

I should say that, we, together with colleagues, in most cases have found a mutually acceptable solution, satisfying our foreign partners, including postponing introduction of the relevant requirements. This also applies to requirements to veterinary certificates, which are postponed until 2018, the requirements to environmental legislation, which are postponed until 2019, and so on. And together with these issues, we have discussed in general the issues connected with the development of the structure of the Russian economy. In particular, we have discussed issues of small and medium enterprises, their interaction with major investors, including global investors, financial development, and economic growth and so on.

Question: Have you discussed the attraction of foreign investors to the Crimea?

Alexey Ulyukayev: No, territorial aspects have not been discussed almost at all, except for a few cases referring to questions about specific companies operating in a particular region and raising questions of interaction, say, with local administrations. Crimea was not discussed.

Question: Alexey Valentinovich, tell me, please (the linked question), Fitch confirmed the rating, i.e. they have decided not to revise the sovereign rating of the Russian Federation to the downside, but at the same time they maintained a negative forecast. Could you comment this?

Alexey Ulyukayev: I think that this is the expected solution. Actually, I and colleagues from other government agencies expected and publicly spoke about it. The fact that the state of our macroeconomy, the level of public debt, the fiscal position and prospects of reducing the budget deficit, the policy of free floating of the national currency and inflation targeting, the knowledge and understanding of major economic indicators that we are facing now are shared, as a matter of fact, by most analysts of international investment banks and rating agencies. If we look at the socio-economic development for the current year, for 2016, we will see that what we and the rating agencies take into account now almost the same facts. The gap is literally in tenths, and in some cases the rating agency gives a more optimistic picture, in particular, for the current year than even our office. Therefore, confirmation of the existing forecast is the expected solution. Of course, we believe that the level of rating that Russia has now is below the actual state of macroeconomics and the real opportunities to provide service commitments, contracts and obligations on bonds or loans. But it apparently will take some time for the colleagues from the international rating agencies to admit this reality.

Question: when, in your opinion, will the sovereign rating be revised?

Alexey Ulyukayev: I think it will be relevant in 2016.

Question: What is the reason for that a number of the projects spilled over from the previous year: supply, tax revenues and so on? Why have investors again raised these issues?

Alexey Ulyukayev: You know, this may be some information gaps. Actually, today we have reported to investors about how we performed and implemented the instructions that gave us the Prime Minister following last year's discussion. And I think they have been satisfied with the report. Thank you.