Interview with Mikhail Mishustin on the occasion of the 220th anniversary of the Finance Ministry

The Prime Minister took questions posed by Rossiya 24 TV Channel correspondent Maria Kudryavtseva.

Excerpts from the transcript:

Maria Kudryavtseva: Good afternoon, Mr Mishustin.

Mikhail Mishustin: Good afternoon.

Maria Kudryavtseva: What is the role of the Finance Ministry in creating a stable financial system and supporting the economy?

Mikhail Mishustin: The Finance Ministry undoubtedly plays the most important role in that.

I am pleased that we are having this conversation ahead of a major holiday. The forerunner of the Finance Ministry was created 220 years ago under Tsar Alexander I. It was called the Finance Ministry and consisted of three important services, which were called collegiums back then. The revenue collegium - it was called the chamber collegium - was in charge of revenue. Accordingly, it was the forerunner of the taxation service. The second collegium was called the state office collegium and was responsible for expenditure. The third service was called revision collegium - these are the functions of audit department, which are now distributed among a number of the Finance Ministry's subordinate services. Since then, the Finance Ministry has been functioning as we know it today.

The main functions of the Finance Ministry include, primarily, the provision of all basic functions of the state. Fulfilling the national development goals that the President has set before us and the people are expecting from us is, of course, the most important aim which is, first and foremost, related to social obligations that include the payment of pensions, benefits and wages, as well as a wide variety of different areas related to the construction of kindergartens and schools, as well as housing and utilities. Prioritising expenses and the revenue account are among the Finance Ministry's functions.

What else is important? That the Finance Ministry presents budget estimates. The budget is a vital, fundamental document for the nation, which includes all sources of income and calculations involving revenue and, respectively, expenditures. You know, debates over how best to spend the money never end. They talk about the percent of GDP that should be spent on this or that sector. Of course, I already said that social spending is the most important issue. You know what the President thinks about fulfilling social commitments. It is a national priority.

Next, spending on healthcare, medicine, education and many other things, like the development of the industry. How can we do this correctly? We compile a three-year budget. Why a three-year period? This is related to investment cycles and budgeting cycles. In general, it is impossible to do anything really important, create a product or an item very quickly. You can't build a house in a year; it usually takes longer.

A three-year plan - we used to have five-year plans in the Soviet Union - is a very important document, which must be coordinated with all departments, federal authorities and public associations, and after that we discuss it. It is scrutinised by the Accounts Chamber and, of course, by the Federal Assembly, that is, by the State Duma and the Federation Council. All departments of the Presidential Executive Office analyse it. As you know, after that it is approved and submitted to the President for signing. So, this complex and systemic process is the responsibility of the Finance Ministry.

I should also mention the services and agencies that comprise the Finance Ministry; this is important. Apart from the Finance Ministry itself as a legal entity, there are major and sizable services such as the Federal Taxation Service, the Federal Customs Service, the Federal Agency for State Property Management (Rosimushchestvo), the Federal Treasury and the Federal Service for Alcohol Market Regulation. I can tell you how many civil servants in Russia are working at the Finance Ministry and its agencies and services: over 60 percent or more, about 64 percent to be more precise.

When we talk about the Finance Ministry, we must certainly mention its personnel. Personally, I worked at the Finance Ministry for many years. But first of all, I would like to congratulate Anton Siluanov, who is a professional with a capital P. There is only one entry in his work record: Finance Ministry, where he started working after service in the army. Mr Siluanov was involved in the most important decisions, including the establishment of the Stabilisation Fund, which was later renamed the National Wealth Fund, the expansion of the Finance Ministry, the digital platforms and the budgetary rule. These are the elements of financial stability that allowed our country to develop sustainably and to provide the necessary resources to the federal executive authorities and the people. Anton Siluanov and my colleagues that work there, deserve our most heartfelt thanks. They don't always grant our requests, yet I believe that today we should congratulate them on their day and wish them all the very best.

Maria Kudryavtseva: Which Finance Ministry decisions had a direct effect on stability?

Mikhail Mishustin: There have been many, but I think pride of place should be given to the adoption of the Tax Code, the first and second parts, in the early 2000s. It was very important. Before 2000, we had about 53 taxes and duties. After that, the figure was cut to 13 or 14. Optimisation and the reduction of the tax burden were landmark decisions, the effects of which all companies and people working in Russia felt.

Of course, there is also the Stabilisation Fund, which was later changed to the National Wealth Fund. This was a major achievement that helped us create a safety cushion and reliably plan, along with the Bank of Russia that implements our monetary policy and does so independently, the financing of all functions of the state.

Next, the creation of the electronic budget and technological management platforms, like the Taxation Service and the Treasury have, and the single treasury account and customs management, which is being developed at the Finance Ministry. Thanks to these landmark decisions, people can maintain financial stability even despite the unprecedented sanctions being imposed against our country. This is how things really stand. Of course, all this, together with a system of regulations and decisions adopted at the Finance Ministry, is being done for the benefit of the people and is a responsible state policy.

Maria Kudryavtseva: Mr Mishustin, which decisions of our fiscal authorities - the Finance Ministry and the Central Bank - helped us overcome the 2014 sanctions and are still effective now?

Mikhail Mishustin: There can be different responses to sanctions. There are short-term responses, where you analyse the risks and threats such sanctions can pose to agencies, people, federal executive authorities and companies, after which you adopt short-term decisions and then plan long-term decisions. There is also a responsible monetary policy, which the Central Bank implements independently but in coordination later with the Government. This implies subsidising credit rates, low-rate loans, and many other programmes.

As for sanctions, including those imposed in 2014, which you mentioned, if we compare them to the 2022 sanctions, we see that the number of them is larger than the sum total of sanctions adopted against all other countries in the world. The number of sanctions that have been adopted against Russia in such a short period… it would take days to read them, because there are so many details.

But the important thing is that the systematic work and, if I may say so, the hardening of our Government and our state, which is responding to these sanctions professionally, allow us to avoid the negative scenarios our ill-wishers hoped to see realised.

Regarding the scenarios expressed by the leading global analytical and financial agencies in March, I would like to remind you that they expected at least a 25 percent contraction in our GDP, at least a 30 percent growth in inflation, the collapse of the rouble and the death of our industrial capacity. Do you remember this?

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