MOSCOW (Reuters) -- Russia will do everything in its power to prevent global financial crisis capsizing its economy, Prime Minister Vladimir Putin has said, announcing a package of stimulus measures and help for people who lose out in the downturn.
Speaking at the annual congress of the dominant Unified Russia party, which he chairs, Putin laid out a strategic vision for how Russia would respond to a crisis that has driven its stock markets down over 70 percent since May.
The crisis has hammered confidence in the Russian economy and raised the prospect that popular discontent could, for the first time in eight years, seriously undermine the ruling double act of Putin and President Dmitry Medvedev.
"People are asking a fair question: What is going to happen to us?" Putin told the congress, in an upscale shopping center a few meters from the Kremlin. "Russia, like many other developed countries in the world, is facing difficult conditions.
"We will do everything in our power to make sure that there are no more economic shocks like the ones in 1991 and 1998," he said, referring to the turmoil after the collapse of the Soviet Union and, later, when Russia effectively defaulted on its foreign debt 10 years ago.
Putin said he believed Russia's large gold and foreign exchange reserves and the funds it had accumulated during years of high oil prices put it in good stead to weather the crisis.
"The reserves that we have accumulated have given us room for maneuver. They allow us to preserve macroeconomic stability and therefore they will help us prevent a surge in inflation and a sharp change in the ruble rate," he said.
Investors Underwhelmed
Russia's MICEX stock exchange picked up slightly after Putin's speech but did not regain earlier losses. Investors did not share Putin's optimism about the economy.
Putin, who addressed the congress after a short speech by Dmitry Medvedev, made no references to fevered speculation that, prompted by the crisis, he could be planning to make a comeback to the Kremlin in an early election.
Kremlin critics have said a draft law now in parliament to extend the presidential term to six from four years may be part of a plan to trigger early elections, though officials have denied any such intention.
James Fenkner, managing director of Moscow-based investment fund Red Star Asset Management, said he believed Putin was unrealistic on protecting the ruble.
"They're bleeding reserves trying to support the currency," Fenkner told Reuters. "They have to move that exchange rate."
Underscoring his view that the crisis was caused by excessively financial liberal policies in the United States, Putin said Russian companies should aim to finance almost all their debt from domestic sources.
His proposed stimulus package included bringing forward tax breaks for companies, more flexibility for local government to reduce tax, and an extra $1.8 billion in spending on the defense manufacturing sector.
In an apparent acknowledgement of the downturn's potential to hurt his government's popularity, Putin repeatedly offered reassurances that his government would protect ordinary people from the worst effects.
He said from January 1 next year unemployment benefit would go up for some claimants by 1,500 rubles ($54.66) -- a possible source of comfort for the thousands of people affected by layoffs since the start of the crisis.
Speaking at the annual congress of the dominant Unified Russia party, which he chairs, Putin laid out a strategic vision for how Russia would respond to a crisis that has driven its stock markets down over 70 percent since May.
The crisis has hammered confidence in the Russian economy and raised the prospect that popular discontent could, for the first time in eight years, seriously undermine the ruling double act of Putin and President Dmitry Medvedev.
"People are asking a fair question: What is going to happen to us?" Putin told the congress, in an upscale shopping center a few meters from the Kremlin. "Russia, like many other developed countries in the world, is facing difficult conditions.
"We will do everything in our power to make sure that there are no more economic shocks like the ones in 1991 and 1998," he said, referring to the turmoil after the collapse of the Soviet Union and, later, when Russia effectively defaulted on its foreign debt 10 years ago.
Putin said he believed Russia's large gold and foreign exchange reserves and the funds it had accumulated during years of high oil prices put it in good stead to weather the crisis.
"The reserves that we have accumulated have given us room for maneuver. They allow us to preserve macroeconomic stability and therefore they will help us prevent a surge in inflation and a sharp change in the ruble rate," he said.
Investors Underwhelmed
Russia's MICEX stock exchange picked up slightly after Putin's speech but did not regain earlier losses. Investors did not share Putin's optimism about the economy.
Putin, who addressed the congress after a short speech by Dmitry Medvedev, made no references to fevered speculation that, prompted by the crisis, he could be planning to make a comeback to the Kremlin in an early election.
Kremlin critics have said a draft law now in parliament to extend the presidential term to six from four years may be part of a plan to trigger early elections, though officials have denied any such intention.
James Fenkner, managing director of Moscow-based investment fund Red Star Asset Management, said he believed Putin was unrealistic on protecting the ruble.
"They're bleeding reserves trying to support the currency," Fenkner told Reuters. "They have to move that exchange rate."
Underscoring his view that the crisis was caused by excessively financial liberal policies in the United States, Putin said Russian companies should aim to finance almost all their debt from domestic sources.
His proposed stimulus package included bringing forward tax breaks for companies, more flexibility for local government to reduce tax, and an extra $1.8 billion in spending on the defense manufacturing sector.
In an apparent acknowledgement of the downturn's potential to hurt his government's popularity, Putin repeatedly offered reassurances that his government would protect ordinary people from the worst effects.
He said from January 1 next year unemployment benefit would go up for some claimants by 1,500 rubles ($54.66) -- a possible source of comfort for the thousands of people affected by layoffs since the start of the crisis.