Putin vows to curb inflation
Vladimir Putin, takes over as Russia's prime minister a day after leaving the Kremlin and pledges to curb inflation.Updated: May 08, 2008, 17:57 IST
Vladimir Putin, taking over as Russia's prime minister a day after leaving the Kremlin, pledged on Thursday to curb inflation, cut taxes and boost social spending to make Russia a top world economic power.
Putin said in a speech to parliament presenting his candidacy that he wanted "single-digit inflation within a few years" as part of a long-term plan to make the country a global economic leader by 2020.
Legislators voted 392-56 to confirm him as premier, with the opposing votes coming from the Communists.
His appearance marked the latest stage of a carefully choreographed transition of power to his chosen successor Dmitry Medvedev, who became president on Wednesday.
Medvedev earlier presented Putin's candidacy, saying in brief remarks that his mentor would play a "key role" in shaping the country's development over the next 12 years.
"All these years we worked with him and continue to work together and I think no one has any doubts that our tandem will only get stronger," the new president said.
He then sat on the platform and watched as Putin took the rostrum for a 45-minute exposition of his priorities.
"First and foremost we need a robust macro-economic situation," Putin said. "In this connection, we will devote the closest attention to all aspects of financial policy -- first of all to measures directed at reducing inflation."
Investors have said inflation is Russia's biggest economic problem, with price rises running at 14.3 percent in April on an annualised basis and growing fears of labour unrest.
Russia is in its 10th year of rapid growth and Putin said it would displace Britain this year as the world's sixth biggest economy based on purchasing power.
Putin said Russia wanted to invest its growing wealth abroad but complained that "political reasons" had prevented Russian companies from investing $50 billion overseas in the past year.
The new prime minister said big rises in spending on health, education and infrastructure were needed to secure Russia's place as a leading country.
Putin called for lower taxes on the oil industry, which has complained that excessive duties are crippling its ability to boost production, but gave no details.
He also called for tax breaks for the securities market but said a legal basis was needed to regulate derivatives trading.
"Lightening the tax burden will be a significant stimulus for the country's business climate," Putin said. "I believe that we need to decide on the strategy and tactics of further tax cuts no later than by August."
Financial markets welcomed Putin's comments on lightening the tax burden, particularly of the oil sector.
"The statement on oil taxes was very important," said Yaroslav Lissovolik, chief economist at Deutsche Bank in Moscow.
"The market has received that positively and for the first time reducing taxes has been named as a measure for improving investment activity."
The incoming premier said decisions were needed on the scope of the state's involvement in the economy. "Dozens of enterprises which are 100 percent state-owned are not being modernised...and have not turned a profit in years," Putin said.
The confirmation vote was a technicality because Putin's United Russia party controls more than two-thirds of the seats in the Duma (lower house of parliament).