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 | Kazakhstan: Country Briefing 2000 | | 27.04.2000 | | Eurasia Economic Summit 2000 | Since 1994 Kazakhstan has embarked on a comprehensive stabilization and reform programme and as a result has benefited from relative macroeconomic stability, early access to capital markets and comparatively high levels of foreign direct investment. Halted by the Russian crisis of August 1998, the first signs of output recovery are now apparent. Where will the Kazakh economy go from here and what are the current plans for structural reform were the key questions posed by Thierry Malleret, Head of Central and Eastern Europe/Central Asia, World Economic Forum, to the two panellists.
Grigori Marchenko, Governor of the National Bank of Kazakhstan, took as his starting point the introduction of a floating currency regime a year ago in April 1999. The country is currently enjoying a relatively strong trade balance thanks to the combined devaluation of the tenge and an increase in commodity prices. As a result a current account surplus is expected this year. The tenge is currently appreciating (from 142.7 to 142) supported by net reserves standing at US$ 1.55 billion.
The banking system, resultant from a major reconsolidation programme that reduced 230 banks two years ago to 48, has so far proved resilient. It is quite liquid and the last six months showed a 42% increase in population deposits. Kazakh eurobonds outperformed the average index for emerging markets. The Governor went as far as to claim that the reformed pension scheme has outperformed those in Chile and Peru, and will provide an anticipated extra US$ 300 million for government security markets. The insurance sector currently lacks the requisite regulation, but the introduction of new legislation is planned for June of this year. Plans are under discussion to introduce a housing saving scheme based on a German model.
Karim Massimov, Chairman of the Board, Halyk Savings Bank, Kazakhstan, also recognized that the current economic situation is much better than might have been hoped six months ago, with real GDP growing at an impressive annual rate of 9% in the first quarter of this year. A solid record for attracting FDI is being sustained.
Historically, commodities have accounted for a majority percentage of the economic portfolio. It is now imperative to diversify the country’s economic base not only to safeguard against short-term vulnerability but also to enable Kazakhstan to take its place in the new global economy. Massimov predicted a convergence of global and domestic markets and stressed the need to develop appropriate industries accordingly. For example, "value-added industries" linked to crude resources. It was generally agreed that the government’s role in providing a conducive environment for the development of such a strategy is crucial if the current, relatively encouraging situation is to be sustained and capitalized upon. |
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