Priorities of regional economic policy in Karachay-Cherkess Republic

The priorities of regional industrial development in Karachay-Cherkess Republic until recently were not clearly determined. The programme "Social and economic development and policy of activity of the Government of the republic for 1997 - 2000" envisages state support of processing industry, power complex, all companies and productions that managed to preserve more than one third of their production capacity by the beginning of 1997 (non-ferrous metallurgy, industry of building materials, chemical, petrochemical, coal industry). Besides that the task was set for state support of small business.

However in such volume the programme could not be implemented.

The tasks set for the social sphere were more successful. Due to attraction of the own funds of the population for housing construction it was possible to accomplish in general the target housing programme set for 1996 - 2000.

With the help of a number of institutes of the Russian Academy of Sciences the medium-term prospective Programme of social and economic development of Karachay-Cherkess Republic for 1999 - 2000 and till 2005 was prepared in the republic. It stresses that the end of crisis in the industry of the republic is almost impossible without the support of the federal budget, state investment programmes and use of foreign credits.

At the first stage of the programme implementation it is suggested by the federal and republican budget support to ensure development, renovation and modernisation of "basic" industrial companies on the basis of prepared business-plans. The "basic" companies include companies of Karachay-Cherkess Republic processing ore and non-metallic materials, agricultural products and objects of recreation and tourist complex. The forms of support at this stage can be granting of reimbursable, but preferential loans, as well as guaranties of the Government of the Russian Federation under investment credits of large and medium-size companies in Karachay-Cherkess Republic.

Except for the investments in the "basic" projects, the Programme includes a number of other important measures:

•   support of development of small enterprises in light, food industry, production of building materials, construction, transport and housing and public utilities;

•    development of business infrastructure;

•   preparation and implementation of the projects of renovation, modernisation or reorganisation of large industrial companies in engineering, electrical and radio engineering, including former defence industry companies.

Thus, the main concept of regional development which was included into the Programme is to provide the first impulse to the growth of production in the companies working on local raw resources or using recreational potential and then to pass to modernisation of mechanical engineering, food and light industry using the profit from the "basic" projects. Special attention is paid to the development of small business, which is important for the region with excess manpower like Karachay-Cherkess Republic, as well as market infrastructure.

According to the forecasts of the developers of the Programme, in case of implementation of the measures set forth in the programme ("optimistic version") industrial production in the republic might increase from 1282 million roubles in 1998 to 2450 million roubles in 2005 (the calculations are made in the prices of 1997). If it is impossible to use the intended growth incentives the development will go according to "inertial version" and the increase of industrial output will not exceed 1720 million roubles in 2005.