KazakhstanGrok is on the mailing list for periodic news updates from the Embassy of Kazakhstan in Washington. We will provide them here for your information as we receive them. This bulletin was received on February 17, 2010 and covers subjects in these areas: Kazakhstan’s presidency of the Organizational for Security and Cooperation in Europe; politics and economy.
TABLE OF CONTENTS
OSCE
• Medvedev supports OSCE summit initiative of Kazakh president
• OSCE Chairperson meets Azerbaijani leaders, says trust between sides crucial for peaceful settlement
• Elmar Mammadyarov: “Azerbaijan supports the initiative to hold OSCE summit in Kazakhstan”
• Kazakhstan ready to contribute to Karabakh peace process: Saudabayev
• Kazakhstan can give impetus to Karabakh settlement
• Expert: Kazakhstan has more chances to solve Afghanistan’s problem among countries presiding in OSCE OSCE Centre supports conference on establishing national preventive mechanism on torture in Kazakhstan
POLITICS
• UN to consider Kazakhstan’s report on elimination of all forms of racial discrimination
• Kuwait praises Kazakhstan for achievements
• Norway opens new embassy in Kazakhstan
ECONOMY
• Kazakhstan recovers as financial stability returns
• Kazakhstan to host conference on development of Islamic financeKazakhstan innovates banking development
OSCE
Medvedev supports OSCE summit initiative of Kazakh president
ITAR-TASS
Russian President Dmitry Medvedev has supported the initiative of Kazakh President Nursultan Nazarbayev to hold an OSCE summit in Kazakhstan in 2010.
Medvedev and Nazarbayev met at the Russian leader’s Zavidovo residence in the Tver region on Sunday. Nazarbayev is paying a brief working visit to Russia.
Medvedev wished Kazakhstan the successful presidency at the Organization for Security and Cooperation in Europe.
“This is a remarkable year. I wish you the successful presidency at the OSCE. That is a serious and demanding work, and we are ready to render comprehensive support to Kazakhstan, to implement joint initiatives and to solve the most complicated problems together,” Medvedev said.
“There will be plenty of regional forums, at which Russia and Kazakhstan will discuss regional security and challenges that appeared last year or earlier, such as crime, drugs, Afghanistan and Pakistan,” he said.
“Significant processes are taking place, and we are chairing [the OSCE] thanks to the support of Russia and all CIS member states,” Nazarbayev responded. “We suggest holding an OSCE summit in Kazakhstan. Many support this initiative, but the final approval is yet to be attained. I think that the organization, which have not had summits for the past eleven years, must meet at some point, at least for evaluating the current condition of security, economy and human dimension issues,” he said.
“You are absolutely right,” Medvedev said.
Nazarbayev proposed the summit at the meeting of the OSCE Permanent Council, which marked the beginning of the Kazakh chairmanship at the organization. “The forum of the OSCE leaders will mark the 35th anniversary of the Helsinki Final Act, the 20th anniversary of the Paris Charter and the 65th anniversary of the end of the WW2,” Nazarbayev said.
Kazakhstan succeeded to Greece as the OSCE chair on January 1, 2010. The chairmanship will last for one year.
OSCE Chairperson meets Azerbaijani leaders, says trust between sides crucial for peaceful settlement
OSCE press release
BAKU, 15 February 2010 – The OSCE Chairperson-in-Office, Secretary of State and Foreign Minister of Kazakhstan Kanat Saudabayev, during his visit to Azerbaijan today reiterated the Organization’s readiness to give new impetus to the settlement of the Nagorno-Karabakh conflict and support the mediation process, and suggested drawing on shared history to achieve progress.
“We attach great importance to the South Caucasus region and to international assistance in resolving complex challenges the countries in the region are facing,” he said following a meeting with Azerbaijani Foreign Minister Elmar Mammadyarov. “There is no alternative to a peaceful resolution of the problem based in the first place on trust and mutual understanding between the sides to the conflict.”
Saudabayev added: “Kazakhstan is the first ex-Soviet state to chair the OSCE, and we will seek to fully utilize the shared history and similar mentality of our peoples, as well as the trust and good relations between our countries’ leaders to achieve possible progress in resolving the protracted conflicts in a peaceful way. This is one of the top priorities of our Chairmanship.”
“I fully support the mediation efforts of the Minsk Group Co-Chairs, and pay tribute to the confidence-building work of my Personal Representative Ambassador Andrzej Kasprzyk.”
He underscored that the key tools of the Kazakh OSCE Chairmanship to address protracted conflicts will be monitoring, identification of any positive signals or signs of a potential escalation, and the use of preventive mechanisms, including political consultation within the OSCE framework. He stressed the importance of fostering tolerance and mutual trust between the peoples of the countries involved.
During his visit Saudabayev met Foreign Minister Mammadyarov and representatives of the political parties. He will meet President Ilham Aliyev and Oktay Asadov, the Speaker of Parliament, later today.
Saudabayev’s visit to the South Caucasus is the first visit to the region where the OSCE has field missions. He noted the co-operation between Azerbaijan and the OSCE, including with its Office in Baku, the Representative on Freedom of the Media and the OSCE Office for Democratic Institutions and Human Rights.
The Chairperson-in-Office said he believed that Azerbaijan will continue to work together with the OSCE institutions on improving the legal media environment in the country and co-ordinating monitoring of parliamentary elections in Azerbaijan in November, building on the progress shown in the 2008 presidential election. He also underscored the readiness of the OSCE to support the process of democratic reform in the country.
Saudabayev expressed gratitude to the Azerbaijani leadership for its participation in realizing the initiative to hold an OSCE summit in 2010.
The OSCE Chairperson will travel to Yerevan this evening for talks with the Armenian authorities and political parties on Tuesday.
Elmar Mammadyarov: “Azerbaijan supports the initiative to hold OSCE summit in Kazakhstan”
APA.az
“Azerbaijan supports the initiative to hold OSCE summit in Kazakhstan later this year”, said Minister of Foreign Affairs of Azerbaijan Elmar Mammadyarov at the joint press conference with the OSCE Chairman-in-Office, State Secretary/Minister of Foreign Affairs of Kazakhstan Kanat Saudabayev, APA reports.
Saudabayev said he visited the region as the OSCE Chairman-in-Office for the first time and began his trip in Baku. “One of the Kazakhstan’s priorities in the OSCE chairmanship is the frozen conflicts, including Nagorno Karabakh conflict. I aim to learn all specters of existing problems. The OSCE needs to learn all these problems to contribute to their solution. Kazakhstan has reasons. We know the history of the conflict and we have good relations with the conflicted parts, which respect and believe in our president. Kazakhstan would like to use this resource”.
The guest said he had very constructive talks with Elmar Mammadyarov. “We have very important meeting with President Ilham Aliyev ahead. I hope I will get necessary recommendations and advises for our future actions”.
Saudabayev said Athens meeting between the foreign ministers and Sochi meeting between the presidents created certain optimism. “2010 with its parameters is a special year for the solution to the conflict. All sides, including the OSCE Chairman-in-Office should use the existing opportunities”.
Kazakhstan ready to contribute to Karabakh peace process: Saudabayev
News.am (Armenia)
In all respects 2010 inspires optimism for Karabakh conflict settlement, OSCE Chairman-in-Office, Kazakh Secretary of State and Foreign Minister Kanat Saudabayev said at the joint press conference with Azerbaijani FM Elmar Mammadyarov in Baku.
“All the sides should take advantage of the current situation. Success might be reached if both sides adhere to constructivism,” Saudabayev stated.
He also noted that his regional visit is aimed at studying whole range of the issue. “There are many threats and challenges in the world that demand adequate solution and consideration. So-called unsettled conflicts, including Karabakh issue are urgent. Karabakh conflict settlement is one of the main priorities of Kazakhstan’s presidency in OSCE,” he added.
“Kazakhstan is ready to work out concrete measures and significantly contribute to the settlement of the issue. We have held constructive talks with Elmar Mammadyarov and I intend to meet Azerbaijani President Ilham Aliyev as well. I will receive advice and recommendations to be taken as a basis for our future actions,” Saudabayev concluded.
Kazakhstan can give impetus to Karabakh settlement
News.az (Azerbaijan)
Tackling protracted conflicts is a priority for Kazakhstan as chair of the OSCE, according to the head of the OSCE’s Baku office, Bilge Cankorel.
He said that the OSCE chairman-in-office, Kazakh Foreign Minister Kanat Saudabayev, had set out his country’s priorities as OSCE chair at the organization’s session in Vienna.
“The main focus will be on the protracted conflicts. There are a number of similar conflicts in the OSCE area, including the conflict between Armenia and Azerbaijan. I believe Kazakhstan will give a new impetus to resolving the problem, especially if we take into account the similarity of cultures and tradition of economic and cultural relations between Kazakhstan and Azerbaijan,” Cankorel said.
He also highlighted the Kazakh initiative to hold a summit of heads of OSCE member-states. The last summit was held in 1999 in Istanbul.
“The final decision is still pending, but the idea is certainly of great significance,” Cankorel said.
“Decisions taken at summits with the participation of presidents are more valid and meaningful, and their execution is binding as the documents are signed by the heads of the member-states.” Summits are useful in finding solutions to problems, Cangorel said.
Expert: Kazakhstan has more chances to solve Afghanistan’s problem among countries presiding in OSCE
Trend News
Kazakhstan among all countries presiding in the Organization for Security and Cooperation in Europe (OSCE) will be close to solving the problem of Afghanistan, U.S. expert on Central Asia Bruce Pannier said.
“I’m not sure Kazakhstan, as chairman of the OSCE, can fully solve the problems in Afghanistan but Astana is much closer to solve this country’s problem than any other countries presiding in OSCE,” Pannier told Trend News via e-mail.
In 2010 Kazakhstan became chairman of the OSCE. According to official Astana, aiming at constructive cooperation in resolving the challenges and security threats are among the basic principles of Kazakhstan presiding in OSCE. According to observers, a serious threat to security in Central Asia is an unstable situation in Afghanistan neighboring with other countries in the region.
“Afghanistan’s problems are a potential threat to all of Central Asia, including Kazakhstan,” Freedom radio expert Pannier said.
He said the advantage of Kazakhstan is the fact that Astana has monitored events in Afghanistan long before the tragic events of September 11, 2001, after which the anti-terrorist coalition has initiated its operations in the country.
Beyond that, Kazakhstan is considered as Central Asian country and the Kazakhs certainly are Central Asian people. Therefore, many Afghan groups may find it easier to work with a country that can be seen as a distant cousin, rather than Europeans, Pannier said.
Still, the more worldly Afghans understand Kazakhstan’s term as OSCE chairman is short and in one year there is only so much any country could hope to accomplish.
Kazakhstan, as OSCE chairman, will likely follow the lead of Afghan President Hamid Karzai in encouraging some sort of reconciliation dialogue with moderate Taliban figures, but Astana will continue to be staunchly against deals with terrorists.
On the other hand, the Taliban doubtless remember that Kazakhstan is a part of the Soviet Union and Kazakhs made up part of the Soviet troops sent to Afghanistan in the 1980s, Pannier said.
“This is the fact that Kazakhstan is becoming rich as a result of partnerships with Russia and oil sales to Europe. It can be sufficient ground for radical Taliban for propaganda aimed to denigrate the efforts of Kazakhstan,” expert said.
OSCE Centre supports conference on establishing national preventive mechanism on torture in Kazakhstan
OSCE press release
ASTANA, 15 February 2010 – A two-day conference co-organized by the OSCE Centre in Astana to discuss implementation of the Optional Protocol to the UN Convention against Torture (OPCAT) and other cruel, inhuman and degrading treatment or punishment and the development of a national preventive mechanism started in Astana today.
The event brings together some 80 participants, including officials of Kazakhstan’s Presidential Administration, the Parliament and the Ministries of Justice, Internal Affairs, Education, Defence, Labour and Health. Representatives from the Committee of National Security, the Prosecutor General’s Office, the Commission on Human Rights, the Supreme Court, the Constitutional Council, academia and human rights defenders are also taking part.
The main focus of the conference is to discuss the draft law developed by the Justice Ministry on establishing public control in places of detention through a national preventive mechanism (NPM), as stipulated by the OPCAT, which Kazakhstan ratified in October 2008. The conference participants will formulate recommendations for the Justice Ministry on the legal and operational aspects of implementing the OPCAT.
Ambassador Alexandre Keltchewsky, the Head of the OSCE Centre in Astana, said: “Kazakhstan ratified the Optional Protocol to the UN Convention against Torture over a year ago, but the national prevention mechanism is still to be established. I hope that Kazakhstan will preserve a broad-based dialogue in defining the NPM and, ultimately, developing the system that fully meets the standards set by the OPCAT – functional independence, independence of personnel, the necessary financial and human resources and due regard to the so-called ‘Paris Principles’ relating to the status of national institutions for the promotion and protection of human rights”.
Leading international experts from the UN Subcommittee on Prevention of Torture, the European Committee on Prevention of Torture, the Association for the Prevention of Torture and Penal Reform International will share global best practices during the conference.
Alison Hannah, Executive Director of Penal Reform International, emphasized the importance of NPM financing: “The system of support should be transparent. NPMs receiving grants from the ministries responsible for the institutions which will be monitored by these NPMs, will not be independent enough. Therefore, in the case of direct support of the NPM’s work, the decision on grants should be decided by a board of independent experts.”
The conference is co-organized by the OSCE Centre in Astana, Kazakhstan’s Justice Ministry, the Committee of Legislative Reform of the Mazhilis (Lower Chamber) of Parliament, Penal Reform International (PRI/Central Asia) and the British Embassy in Astana.
POLITICS
UN to consider Kazakhstan’s report on elimination of all forms of racial discrimination
Trend News
Kazakhstan will submit the UN the unified fourth and fifth periodic report on adopted legislative judicial, administrative or other measures to eliminate racial discrimination Feb. 26 and March 1, the UN said.
The next session of the UN Committee on the Elimination of All Forms of Racial Discrimination will be held in Geneva from Feb.15 to March 12. The agenda includes consideration of the reports of Argentina, Cambodia, Cameroon, Guatemala, Iceland, Japan, Monaco, Netherlands, Panama and Slovakia.
The Committee consists of eighteen experts and is established to monitor the implementation of the International Convention on the Elimination of All Forms of Racial Discrimination. The Convention was adopted in 1965 by the General Assembly and came into force in 1969. Its participants are 173 States that regularly report to the committee on implementing the requirements of this international legal document.
The Convention states that all people are equal before the law and has right for equal protection against discrimination.
The document calls on states to take all necessary measures to eliminate all forms of racial discrimination and to prevent and to combat racist doctrines and practices in order to promote understanding between races and to build an international community free from all forms of segregation and discrimination.
Kuwait praises Kazakhstan for achievements
Nam News Network
The State of Kuwait welcomed Saturday Kazakhstan’s efforts to strengthen and promote human rights and recommended that it continues to consolidate freedom of opinion and expression, whereby it has allowed for 8,000 media outlets – 85 percent privately owned – to operate in the country.
Addressing the Human Rights Council during the Universal Periodic Review (UPR) of Kazakhstan, member of the Kuwaiti mission in Geneva Nawaf Naman told the Council that Kazakhstan has made great leaps concerning freedom of the press which resulted in operating 8,000 media outlets – 85 percent privately owned – in the country.
Following the delivery of Kazakhstan’s national report to the UPR mechanism of the Council, Naman said that Kazakhstan has managed to achieve the Millennium Development Goals (MDGs) with regards to poverty, and primary education and has done progress in other fields.
Naman noted that Kazakhstan received the leading rank in Asia for education for all in 2008, and UNESCO awarded the country the leading rank worldwide in the same field in 2009.
He also said that Kazakhstan is working on improving mechanisms to protect human rights which are reflected in its national plan to defend human rights for the period of 2009-2012, and described the program as a pioneering one.
Finally Naman added that his country’s delegation recommends to Kazakhstan to continue informing its citizens about their rights and to improve the legal information circulated in the media outlets including the Internet, and to continue its efforts to safeguard freedom of prayer.
Norway opens new embassy in Kazakhstan
Norway Post
Image Crown Prince Haakon officially opened the new Norwegian Embassy in Astana on Friday. The Embassy with a staff of 12 will, in addition to Kazakhstan, cover Kyrgyzstan, Tajikistan and Turkmenistan. Foreign Minister Jonas Gahr Støre, who accompanied the Crown Prince on the visit, said: “The opening of Norway’s first embassy in Central Asia reflects the region’s growing international importance. Kazakhstan is a strategically important country and an increasingly important partner for Norway.”
Mr Støre commented: “Kazakhstan holds the chairmanship of the Organization for Security and Co-operation in Europe (OSCE) this year, and is demonstrating that the country is ready to play a more prominent role at the international level. This entails a commitment to continue vital reforms with regard to democracy, human rights and freedom of the media.”
Norway cooperates with Kazakhstan in a broad range of areas. This is reflected in the talks that The Crown Prince and Mr Støre had with President Nazarbayev and Prime Minister Massimov during their visit to Astana.
The Crown Prince and Mr Støre also opened a business seminar arranged by INTSOK (the Norwegian Oil and Gas Partners). Norway and Kazakhstan both have major oil and gas resources, and cooperation in the petroleum sector is therefore of particular interest. Several Norwegian companies are engaged in Kazakhstan, including Aker Solutions, Statoil and DNV.
Mr Støre also met Deputy Foreign Minister Zhigalov and representatives of civil society.
“At the same time as we are strengthening the political dialogue and assisting Norwegian companies doing business in the country, we are also promoting democracy and human rights in Central Asia. This is an important element in Norway’s engagement in the region,” Mr Støre added.
(NRK/Press release)
ECONOMY
Kazakhstan recovers as financial stability returns
Reuters
Kazakhstan is likely to sustain its economic recovery after a bleak 2009 as its crisis-hit banking system stabilises and higher commodity prices help prop up broader growth in Central Asia’s biggest oil producer.
The ex-Soviet republic dipped into recession last year for the first time in a decade causing a rise in popular discontent with President Nursultan Nazarbayev, in power since 1989.
One of the earliest victims of the global economic crisis, Kazakhstan has allocated about $20 billion since 2007 to bail out banks, finance unfinished construction projects and help other sectors hit by the downturn.
Four local banks went into default in 2009, raising fears about the ability of the entire system to weather the storm.
Although the largest of them, BTA, has yet to finalise a debt restructuring deal, analysts say they already see some light at the end of the tunnel.
“In BTA there are some delays, but we still expect their restructuring to be completed in the second quarter of 2010,” said Renaissance Capital analyst Milena Ivanova-Venturini.
Signalling its further confidence in economic recovery, Kazakhstan this month introduced a wider band for the tenge currency which was devalued a year ago by 18 percent.
“Kazakhstan is one of the countries in the EEMEA (Eastern Europe, Middle East and Africa) universe that we are most bullish about in 2010,” said Nomura analyst Ivan Tchakarov.
“Strong government support for the economy, including in the ailing banking and construction sectors, coupled with recovering energy prices and still very robust FDI (foreign direct investment) inflows should pave the way for a stable, if somewhat subdued, economic performance in 2010.”
The government says its support package helped achieve gross domestic product (GDP) growth of 1.1 percent last year despite a 2.2 percent contraction seen in January-September.
The official growth forecast for 2010 is 1.5-2.0 percent. Tchakarov said his forecast for Kazakh growth in 2010 was 3.5 percent, based on an average oil price of $73 per barrel.
“We think the government’s own forecasts are very conservative and are probably made to manage expectations,” he said. By comparison, GDP in Russia, Kazakhstan’s biggest trading partner, contracted by 7.9 percent last year.
Tchakarov said the expected tenge appreciation should not hurt the wider economy “as it would only imply a catch-up with exchange rate developments in key trading partners”.
Russia’s rouble has strengthened to 30.5 per dollar from 36.0 per dollar within the last 12 months while the tenge has been mostly stable within the 148-151 per dollar range.
Bilateral trade between Russia and Kazakhstan, who share a long border, is set to grow further as the two launch a customs union this year along with another ex-Soviet nation, Belarus.
In a fresh sign of renewed confidence, Kazakhstan last month threatened to strip foreign oil companies of tax exemptions originally granted to them in the 1990s — a plan foreign companies have strongly criticised.
STRONGER TENGE GOOD FOR BANKS
Economists say overall economic growth in Kazakhstan relies largely on the recovery in the banking sector — once the pride of its booming economy.
Investors watch BTA restructuring talks particularly closely after it failed to report on a final deal with creditors that had been expected by the end of January.
The government has said it could sell BTA, which has filed for creditor protection in the United States, to Russia’s Sberbank after the restructuring.
The sector’s immediate response to the credit crunch has been to stop lending and the government is pushing banks to become less conservative in an effort to spur the economy.
“The biggest support factor for banks this year would be an appreciating tenge,” said Renaissance Capital analyst Milena Ivanova-Venturini. “We currently call for the tenge to appreciate to 135 to the dollar by year-end.”
She said a stronger tenge would make foreign currency loans, widely used in Kazakhstan, cheaper for borrowers, improving asset quality. It would also improve banks’ capitalisation ratios by shrinking foreign currency assets.
Citigroup, which sees the tenge appreciating to 140 per dollar by the end of this year and economic growth reaching 2.6 percent, said in a report this month financial stability was returning to Kazakhstan.
It said in a note: “While we do not expect credit growth to return before end-2010, we believe that as long as credit growth is not negative, it will be sufficient for the economy to bounce back.”
Kazakhstan To Host Conference On Development Of Islamic Finance
Bernama.com
The Kazakh city of Almaty will host an international conference on development of Islamic finance in the Commonwealth of Independent States, Azerbaijan’s news agency AzerTac reported Friday.
The conference, organized by Cbonds Information agency, will be a pioneering event featuring discussions on how to strengthen Islamic financing in the region.
Roughly 200 representatives of Kazakh financial institutions, corporations, and state agencies are expected to attend, as are representatives from Russia and other CIS countries. The conference will be held with the support of the RFCA and the Association of Financiers of Kazakhstan.
The event will be held as part of annual Kazakhstan Financial Forum.
Kazakhstan innovates banking development
By Robert M Cutler, Asia Times
Of the “newly independent states” of the former Soviet Union, Kazakhstan continues to lead the economic recovery from the continuing global financial crisis, based in part on an innovative approach to financial restructuring of the banking sector that statutorily limits the prerogatives of creditors.
The National Bank of Kazakhstan (NBK) will widen the exchange-rate corridor this month to 125-165 tenge per US dollar, according to chairman Grigorii Marchenko, moving towards a “controlled float” system in which the currency is allowed to fluctuate within a rather wide band with only occasional intervention by the central bank. This was foreseen on this site last year (see Kazakhstan’s tenge far from secure, Asia Times Online, February 12, 2009).
A recent Citi research note foresees a 3% tenge appreciation in the next few months and a 5-10% appreciation during the course of the current calendar year, bringing the rate eventually close to 140 to the dollar. The NBK has to date bought about US$6 billion since November to forestall the tenge’s appreciation.
Foreseeing low inflation in Kazakhstan over the near term, Citi reports that the NBK chairman expects fiscal policy to bear the brunt of curbing inflation, even if in practice it may be unable fully to do so.
On the banking front, a presidential decree published this month extends the country’s earlier innovative approach [1]. In view of “the negative experience of the dependence of Kazakhstan’s financial sector on foreign loans”, the financial sector is to be given the task of mobilizing domestic resources as well as the means, assisted by the state, for “the attraction of domestic sources of financing”, according to the decree.
Two major banks – BTA Bank, the country’s biggest lender, and Alliance Bank, the fourth-largest – defaulted on foreign obligations last April and May after having been taken over by the state in an effort to stabilize the wobbling banking sector.
Most remarkably, the new presidential decree observes the international experience of the “ineffectiveness of establishing specialized banking sectors … need[ing] permanent state assistance” and instead foresees “a system of … institutions of investment banking” benefiting from increased state regulation according to international standards following countercyclical strategies.
In the “post-crisis” period, this means, among other things, seeking to increase competition in the financial sector and in the first place among banking institutions. The sections of the decree on the implementation of enhanced regulation are, however, among the sketchiest in the document.
While the highly programmatic nature of this decree gives it the style of an inventory of all financial instruments that could possibly be developed (it runs the gamut from microcredit to reinsurance), some are clearly more likely in the near term than others.
Thus, while Kazakhstan’s domestic interests will explicitly govern the extension “on a consolidated basis” of state planning and stimulation of the economy (always respecting “the principles of the free market system”), this “consolidated basis” foresees attracting domestic institutional investors to participate in “state-private partnerships” financed by state-guaranteed bonds.
Pension fund investment in infrastructure projects is specifically mentioned and given the highest profile. Bank deposits of individuals and corporations are also cited as sources of financing, as well as the development of real estate investment trusts and similar vehicles. The list of possible instruments extends even to prime brokerage (ie, bundled services offered by investment banks to hedge funds) and “Islamic financing” (which category, however, is given no content).
It is accordingly expected that credit growth will become a main instrument of monetary policy to influence the exchange rate. However, the NBK itself says that strengthening the state regulation of the banking sector, which for Kazakhstan means increasing the quality at least as much as the quantity of regulation, may, contradictorily, limit the extension of credit in the economy.
It is in this context that we should read the Wall Street Journal’s report this week of the NBK statement, based on its own survey of the country’s commercial banks, that bad loans remain the main systemic risk. Further down in the NBK’s survey, one reads that the absolute quantity of such bad loans has in fact stabilized.
The Citi research note foresees a stronger-than-expected balance of payments, thanks to stronger-than-expected performances in the mining, agricultural and manufacturing sectors – on which basis the tenge will moderately appreciate in the near future.
The 2010 budget will therefore support recovery in domestic consumption, with socially oriented expenditure representing over 40% of the total. The recovery in Kazakhstan will be driven by increases in public as well as private consumption and also restocking of inventories. All this is backstopped by the global recovery of commodity prices in recent months.
Note
1. The decree is entitled “Conception of the Development of the Financial Sector of the Republic of Kazakhstan in the Post-crisis Period.”
Dr Robert M Cutler (http://www.robertcutler.org), educated at the Massachusetts Institute of Technology and The University of Michigan, has researched and taught at universities in the United States, Canada, France, Switzerland, and Russia. Now senior research fellow in the Institute of European, Russian and Eurasian Studies, Carleton University, Canada, he also consults privately in a variety of fields.
SOURCE: KAZAKHSTAN NEWS BULLETIN, Embassy of the Republic of Kazakhstan to the USA
