New PM Putin vows to curb inflation, cut taxes

Vladimir Putin on Thursday took over as Russia’s Prime Minister a day after leaving the Kremlin and pledged to curb inflation and cut taxes to make Russia a leading 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 to 56 to appoint him as prime minister, with the opposing votes coming from the Communists, the only opposition grouping in Parliament.

Dmitry Medvedev, Putin’s protégé who was sworn in as President on Wednesday, later signed a decree confirming the appointment.

Putin’s appearance marked the latest stage of a carefully choreographed transition of power to Medvedev, the man Putin anointed as his successor.

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. ”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% in April on an annualised basis and growing fears of labour unrest.

Overtaking rivals

In keeping with the delicate division of power between Putin and Medvedev, the new prime minister stuck to economic policy and did not stray into politics or foreign policy, his favoured arenas when he was president.

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 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.

”Lightening the tax burden will be a significant stimulus for the country’s business climate,” Putin said.

Russia’s RTS share index rose by 3,5% after Putin’s speech, before falling back slightly. Markets welcomed Putin’s comments on easing the tax burden, in particular on the oil industry.

”… Putin reignited the stock market today by outlining an ambitious set of policy priorities,” Yaroslav Lissovolik, chief economist at Deutsche Bank in Moscow, wrote in a research note.

”Most important of all was a clear message coming from Putin on the need to reduce the tax burden on the oil sector in order to stimulate production and refining of crude oil.”

Putin also vowed to step up the fight against rampant official graft, which he said was one of Russia’s biggest problems, by cutting red tape and supporting a new law against corruption.

The confirmation vote was a technicality because Putin’s United Russia party controls more than two-thirds of the seats in the Duma, or lower house of Parliament.

The Communists’ small grouping has been the only opposition force in the chamber since an election last year, when a small group of independent Kremlin opponents was barred from running by tough new election rules. – Reuters 2008

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