For RUB 1 of our investments comes up to RUB 8 of private investments

How Moscow’s economy is doing under sanctions, which of the worst areas are in crisis, what kind of help the authorities are providing them, and how the next year’s budget will be planned in the light of the situation, Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations, said in interview with RIA Novosti on the site of the St. Petersburg International Economic Forum. Maria Zybina was conducting an interview.

Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations, spoke about how the capital's economy is developing, what assistance the city authorities provide to entrepreneurs

— In August, you predicted that Moscow's gross regional product could fall by 3% by the end of 2022. Do you have expectations adjusted to date?

— Taking into account the industry’s dynamics, consumer and financial sectors, we now plan that the decline in the economy in the city will be about 2%. We slowed down in terms of inflation - according to our forecasts, we will reach a figure of about 12% on an annualized basis. We can say that the state of the capital's economy inspires conservative optimism. The situation has leveled off in most industries, many have grown significantly compared to last year's figures.

— Which industries are the most worrisome for the authorities and require increased attention? Previously, you mentioned two areas - the automotive industry and metallurgy. How is the situation now?

— As before, these two industries are problematic. Already in December, we plan to resume the work of the Moskvich plant - all the necessary decisions and agreements with manufacturers have been signed. Now we are preparing for the planned launch. The AAT plant (Alfa Avtomativ Tekhnolozhiz) launched this year, which both cooperates with Russian automakers and works for export, is also increasing its turnover. In addition, we see significant positive dynamics, for example, in pharmaceuticals and clothing production. In general, despite all the fluctuations, due to the fact that the economy in Moscow is diversified, the dynamics of the industrial production index for the nine months of this year amounted to plus 7.4%.

— What is the situation with the revenues and expenditures of the city budget in 2022?

— Incomes in real terms, unfortunately, are declining. Although in nominal terms, we forecast a plus - by about 8% compared to last year. Therefore, when formulating the budget for next year and for the next three years, we included cautious optimism in terms of revenue dynamics and fairly large reserve funds in the 2023 budget. So far, we see that next year will be in deficit - more than RUB 400 bln. Part of this money is planned to be covered by carry-over balances. In addition, if necessary, we provide for the possibility of borrowing. In the expenditure side of the budget, the city retains two main vectors. More than half of the expenditures, as in previous years, are socially oriented. Moreover, about 40% are investment costs. This is both a targeted investment program, the volume of which will be formed next year in the amount of about RUB 1 trln, and development measures aimed at improving the quality of the urban environment, infrastructure and public space.

— Why is it important to maintain significant investment volumes for the city?

— Private investments directly depend on city investments. Take, for example, a targeted investment program. For the next three years, out of a total of RUB 2.3 trln almost RUB 1.3 trln are planned for transport infrastructure: half of them - for the subway, half - for road and bridge construction. If, for example, we suspend the construction of metro lines, do not open the stations that we promised investors and residents within the specified time frame, then a whole set of investment projects related to the construction of commercial and residential real estate will become either less profitable or unprofitable in general, and will also be suspended. If we don't spend our ruble, we won't get a few rubles of private investment. Thus, we get, one might say, the opposite effect of the multiplier. If we talk about key projects, for example, the Moscow High-Speed Diameter, the Big Circle Line of the metro, we see the effect of our budget investments: investors invest from RUB 5 to RUB 8 per ruble spent their investments. Due to this effect, tax revenues, such projects are fully paid off within 10-15 years. That is, due to the creation of a new transport infrastructure, a new potential for economic development appears.

— You said that in terms of the city's social obligations, all planned expenses will be met.

— Undoubtedly. Even when we talk about investment in construction, you need to understand that almost RUB 0.5 trln is the construction of educational facilities, health care, and other necessary social infrastructure.

— What tasks does the targeted investment program solve?

— The city does not stand still, it develops, the renovation of existing facilities is required. Large-scale programs are being implemented for the overhaul of polyclinics, the renovation of the healthcare system, under which more than 1 mln m2 of modern facilities are being built. New clinics are completely new standards in terms of the quality of buildings, the level of service, and in terms of technology and services. This is an important component corresponding to the dynamics of the city's development.

— Can we say that investments have slowed down or, on the contrary, accelerated?

— Moscow maintains a favorable investment climate. Despite all the fluctuations, large investment projects planned for this year are being implemented in full, none of them has been suspended. In general, we even see a positive trend in terms of investment volume: growth of more than 4% against a very high base of last year. At the end of 2022, we expect an unprecedentedly large figure in terms of the level of investment - about RUB 5.3 trln. If we talk about the special economic zone (SEZ) "Technopolis "Moscow", then its residents invest even more actively, and on average the growth rate of investments is two to three times higher than the average city. All SEZ projects are being implemented on time. Recently, our mayor opened the second stage of one of the large pharmaceutical plants on the territory of the technopolis in Alabushevo. Next year, we expect the launch of two more pharmaceutical production facilities. We can say that a pharmaceutical cluster is being formed in Alabushevo, where several factories for the production of medicines will be concentrated. We are also finishing the construction of a large industrial technopark in Rudnevo. This year we will commission more than 100,000 m2. On its site we plan to create a federal center for unmanned aircraft. We are currently working on the placement of the relevant residents there.

— What industries are most interesting for Moscow from an investment point of view?

— We welcome investors in any industry. The structure of the capital's economy, as I said, is highly diversified. At the same time, it is clear that high-tech industries and enterprises with a high degree of automation take root better in the city. This is because we have great human potential and capital, with appropriate education, knowledge and skills. On the other hand, these labor resources are significantly more expensive, and they are in demand in modern industries with a high level of automation and wages. As a result, according to the laws of the market, such enterprises are located in our country.

— What business support measures provide the Moscow authorities and how much are they in demand?

— The city sent more than RUB 100 bln on direct and indirect measures to help entrepreneurs and citizens. About RUB 40 bln are direct business support measures. By indirect measures, we mean various deferrals of payments that benefit the budget of the city of Moscow. More than 36.000 companies have already applied for anti-crisis measures, we see their demand and positive effect. The results shown by the city's economy show that entrepreneur have coped with new challenges. Among the measures most demanded by businesses is the subsidization of interest rates on loans - in total, we subsidized loans in the amount of more than RUB 170 bln. In addition, we launched a new program related to investment spending in industry: we subsidize loans for enterprises up to RUB 3 bln for three years at a rate of 3% per annum. To date, such loans have already been approved for almost RUB 10 bln. Projects for almost the same amount are still under consideration.

— In addition to the development of industry, the infrastructure component is very important for Moscow. How is the situation in the spheres of transport, services, catering and leisure industry?

— There were certain difficulties, for example, cinemas faced sanctions, limited rental rights, and the mayor decided to allocate grants to support this industry. Today, in general, we see a positive trend in the service sector, tourism, sports, culture, catering in comparison with last year. If we take the hotel and tourism business, then here revenue is plus 30%, catering is plus 40%, and culture, leisure, sports are plus almost 60%, this is compared to last year, when certain restrictions were in effect. However, we are seeing a recovery, including the tourist flow, mainly, of course, domestic, as well as an increase in demand from the population for services.

— What is the situation with unemployment in the Moscow labor market?

— If we talk about unemployment, now we have a historical, one might say, minimum: there are only about 30.000 unemployed, which is 0.4%.

— How do you see the development of the city's economy in the coming years?

— Of course, we must take into account the challenges that are and will be. In March, the vast majority of Moscow enterprises faced difficulties: restrictions on the supply of components, logistical and financial problems. At the same time, today almost all of them have been resolved: substitutes have been found within the country or suppliers from other countries, and logistics chains have been rebuilt. We have an Industry Support Center, within which we work with enterprises in terms of finding new suppliers, building alternative supply chains. We have already received hundreds of requests and we were able to help the most part. Many enterprises began to cooperate with manufacturers in other regions. If we talk about the prospects for the coming years, then this is a progressive, systematic development, and there are all the prerequisites for this. We have planned the implementation of all city programs, without reducing either the volume of construction, or investments, or the volume of measures provided to support the population and businesses. This allows us to be optimistic about the near future.

Source: RBC