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15 Sep, 2008 11:15

President promises liquidity wont be a problem for Russian business

Dmitry Medvedev has promised Russian business there will be no shortage of bank finance. He said the government would minimize the negative impact of the global financial crisis and the military conflict in South Ossetia.

It’s the third time Dmitry Medevedev has met with the Russian business community this year.

From small business entrepreneurs to corporate magnates – they’ve asked for state action to address the impact of the global financial crisis and the Georgian conflict.  What the Russian market needs most now is money, and Dmitry Medevedev promised to ensure enough liquidity.

“The task of the government is to provide additional liquidity to the domestic market. We have the resources and I have already given all the necessary orders.”

Some representatives of the business community had expected the government to use the National welfare fund to support liquidity.  But Russia’s Finance Minister Aleksey Kudrin said the money won’t be invested in Russia.

“It would be premature to invest the national welfare fund within Russia. We are trying to control the money supply at the moment. Besides such an investment policy would only increase the dependence of the Russian market on oil prices.”

Instead the government has doubled the volume of the money the treasury will offer at auction.

Tax cuts are an additional burning issue,  especially for the oil sector, which claims they are necessary to spur investment in the development of new fields. The government has promised to take a decision within a week.