Finance

Finance

Russian president to set out economic reforms in speech

12 November 2009 10:21 (UTC +04:00)

Baku -APA-Economics. Russian President Dmitry Medvedev was expected to ramp up his drive for economic reform Thursday when he delivers an annual state of the nation speech with industry still reeling from the economic crisis, AFP reported.

Medvedev’s plans, which aim to trim the government role in the economy, would target Russia’s "state corporations" -- a key legacy of his Kremlin predecessor, Vladimir Putin.

Medvedev, who last month slammed state corporations as "out of control," in August ordered audits of the conglomerates that control some of Russia’s prize industrial assets.

The probe showed state funds squandered and executives overpaid, Prosecutor General Yuri Chaika reported to the Kremlin leader on Tuesday.

At that meeting, Medvedev gave the initial nod to a proposal to transform state firms set up by Putin into more transparent joint-stock companies.

Under Putin, now the prime minister, Russia created an array of state champions to spur growth in sectors such as car manufacturing, aviation, nanotechnology, nuclear energy and arms building.

But analysts say the opaque structure of such firms has given immense powers to Putin associates like Sergei Chemezov, head of the Russian Technologies conglomerate, and attempts to rein them in have led nowhere so far.

Medvedev has said he would discuss measures to increase accountability and transparency at state corporations in his state-of-the-nation speech, his second since taking office in March 2008.

In a much-discussed article seen as a preview of Thursday’s speech, Medvedev lashed out at his country’s economic backwardness and corruption, while urging Russians to drink less.

"Bribery, thievery, mental and spiritual laziness, drunkenness are sins insulting our traditions," Medvedev wrote in the article published on the liberal news website Gazeta.ru in September.

Russia’s pre-crisis prosperity was built on high oil prices and surging capital inflows, which powered a decade of steady growth of 7.0-8.0 percent annually.

But the crisis and an ensuing plunge in oil prices has highlighted the need to diversify Russia’s economy, the World Bank said Tuesday. The bank predicted a steep contraction in gross domestic product of 8.7 percent in 2009 and very weak recovery in 2010.