Meeting with Deputy Prime Minister Marat Khusnullin

President of Russia Vladimir Putin: Mr Khusnullin, your portfolio is impressive and includes roads, housing construction, and infrastructure. Where shall we begin?

Deputy Prime Minister Marat Khusnullin: Mr President, first of all, I would like to note that this year marks the 70^th anniversary of the Russian construction sector. Construction Worker’s Day was officially established in 1956. The first celebration took place at the Luzhniki Sports Palace to showcase the country’s achievements in construction.

However, the construction sector has made tremendous strides over the past 25 to 26 years. Today, our country boasts hundreds, if not thousands, of landmark projects. These include the facilities built for the Olympic Games and the FIFA World Cup, the Crimean Bridge, expressways, major industrial enterprises, and large-scale residential housing developments. Our cities have changed out of recognition. You travel extensively and you had the opportunity to see just how profound these changes have been in terms of quality.

Vladimir Putin: Yes, that is certainly true.

Marat Khusnullin: Thanks to these comprehensive measures and your support, the construction industry has effectively become the driver of economic growth. Despite all the attempts by our detractors and other unfriendly forces to stand in our way, the sector has grown by 34 percent.

Today, together with related industries, construction accounts for over 20 percent of GDP. Over the past five years, its contribution has increased by 1.9 percent. In terms of tax revenue, the sector now accounts for 16.7 percent of total tax receipts. This is shown in the presentation with its share having increased by 2.9 percent. Employment in the sector and related industries now stands at 17.7 percent.

Vladimir Putin: Seventeen-point-seven percent of everyone employed in the economy?

Marat Khusnullin: Yes, 17.7 percent of total employment. That is an enormous number.

Previously, we looked only at the construction per se. But the construction business has a strong multiplier effect: every ruble invested generates 1.68 rubles in economic activity. Therefore, together with the Federal Taxation Service and the Finance Ministry, we calculated the sector’s full contribution, including all related industries. That is how we arrived at this high figure. Naturally, it has a significant impact on all key economic indicators.

We also examined the regional picture. As you can see on the next slide, the map shows the sector’s contribution across individual regions.

Vladimir Putin: Seventeen-point-seven percent amounts to roughly how many people? About 13 million?

Marat Khusnullin: Yes, 13 million people. If you look at this slide, you can clearly see the extent to which each region depends on the construction sector. At present, 16 out of 85 regions derive more than 20 percent of their regional budget revenue from construction-related activity, while 65 out of 85 regions derive more than 10 percent. Only a handful of regions have a share of 10 percent or less. If you look closely, you will also see that the reunited territories are rapidly gaining momentum, with extensive construction activity taking place there as well.

I would also like to highlight, of course, that the principal matter we are supporting is housing. This is the Infrastructure for Life national project. We are maintaining an unprecedented volume of housing construction, exceeding 100 million square metres. Even the Soviet Union could not boast of building such volumes, including during the reconstruction period. We have maintained this pace for several years in a row.

This year has seen a slight decline; however, it is not feasible to constantly maintain a pace of 110 million square metres. There is a slight reduction, yet I wish to say that the volume of housing supply remains higher than last year. With regard to multi-apartment housing, we are currently maintaining last year’s levels. There is a slight decline in individual housing construction, but we have devised a number of measures to support this sector, which have already been reported to you. I am confident that we will likewise mitigate this issue.

Naturally, housing is being constructed thanks to unprecedented mortgage support. The fact that you, notwithstanding all the circumstances, have kept mortgage lending – primarily family mortgages – means we observe that people are taking them out and paying six percent, as they always have, irrespective of any changes. We are fully meeting all our commitments for every type of mortgage.

Vladimir Putin: This is the most reliable instrument, is it not?

Marat Khusnullin: Yes.

Vladimir Putin: The share of overdue payments, I believe, is about one percent, no more, is that correct?

Marat Khusnullin: Indeed, it is even slightly less than one percent. Compared to other instruments, it is the most reliable, and people repay it consistently.

As for road construction, we are faring quite well. Despite the late spring this year, which caused us to lose roughly a month in terms of deadlines in various regions, we have entirely recovered the lost momentum. That is to say, everything is proceeding according to plan, both in terms of repairs and new construction. This year, we very much hope to open the motorway to Tyumen by the end of the year. The construction of bypass roads around Tyumen, Omsk and Novosibirsk continues.

Vladimir Putin: When approximately will you reach Tyumen?

Marat Khusnullin: In December. We are currently on schedule and have every opportunity to achieve this.

Furthermore, this year we are working on two landmark routes: we are widening the motorway to Belarus and expanding the M3 Ukraine motorway to six lanes. This year, we will also launch the Yuzhno-Lytkarinskaya road in the Moscow Region, utilising extrabudgetary funds. That is to say, we are actively supporting extrabudgetary financing, and this area is progressing well. Accordingly, there are no doubts whatsoever regarding road construction.

Mr President, we are continuing our work on core communities. Pursuant to your instruction, 2,160 core communities have been included in the plans; we have recently reviewed the progress – all plans to enhance the quality of their urban environment by 30 percent by 2030 are currently being implemented.

We see that the 16 indicators we use to assess progress – respective agreements have been signed with each region, each governor monitors the situation, and we hold weekly operational meetings – to date, all indicators are being met, including those concerning the level of urban improvement.

With regard to urban improvement, you have remarked on numerous occasions that the number of people involved in this endeavour increases every year. The public is highly receptive to these initiatives. When you travel across the country, you can see that the parks, squares and embankments that emerge are comfortable and well-designed. Embankments in particular are highly popular, and governors are constantly requesting your support for new embankment improvement projects. This work is also proceeding actively.

Vladimir Putin: Public spaces.

Marat Khusnullin: Yes, Mr President, public spaces.

At the St Petersburg International Economic Forum, you drew attention to the investment and construction cycle; we have been working on this systematically, year after year, in accordance with your instruction. I can report that this year, the average construction period for multi‑apartment housing is three years and three months, or 1,255 days. By the end of the year, we aim to bring this figure down to 1,200 days. When we commenced this work in 2020, it was 1,650 days.

In addition, we continue to reduce unnecessary paperwork and documentation by moving to digital information systems. This year, we have 550 procedures, whereas when we began, we had 1,250. This year, we aim to reduce this number to a maximum of 500 procedures. Thus, we are systematically addressing this matter as well. We hope to fulfil your instructions, which remain under your personal oversight, by the end of the year.

Overall, I would like to note that the work is well organised; despite all the difficulties, we are fulfilling all baseline plans. We are confident that this year, – thanks to you, too – we will fulfil all our plans and duly celebrate Construction Worker’s Day.

Vladimir Putin: Very good. I congratulate all construction workers on their professional holiday.

Another question. If we look at the total volume of residential real estate acquisitions – both through mortgage financing and 100 percent upfront cash payments – how much do citizens invest annually? About 15 to 16 trillion?

Marat Khusnullin: The public invests 16 trillion rubles in housing annually, making citizens the largest investors. Naturally, when we support them through mortgages, people invest more. A whole series of decisions has been taken … However, the most important thing, Mr President, is that we did not halt any projects. That was a difficult decision.

At present, we can see, for instance, that the mortgage market is rising; we observe that as the interest rate decreases, people begin to purchase property. Therefore, we are doing everything possible to maintain construction volumes.

And the most important thing, we must ensure that people receive all their homes and apartments for which they have paid.

Vladimir Putin: On time.

Marat Khusnullin: Yes, on time.

Vladimir Putin: Of the required quality.

Marat Khusnullin: Yes, Mr President.

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