Kazakh government taking aggressive steps to tackle global financial crisis
In the interview broadcast on all major television channels on 16 October, Kazakh President Nazarbayev dwelled at length on explanations for the causes of the global financial crisis.
The president tried to reassure Kazakhs that the country would weather the storm., noting that its gold and currency reserves and its National Fund stood at a combined total of over billion.
He told his countrymen that the government would guarantee bank deposits of up to 5 million tenge (or about US$ 40,000), reiterating promises to increase pensions and public sector salaries by 25 per cent in 2009, and by a further 25 per cent in 2010, announcing as well that the government would build more schools and hospitals.
Still some sectors like the construction industry have been affected by the crisis and are ailing. Problems in this sector have resulted in thousands of people being left without homes for which they had already paid because developers could not complete them as a result of the rising cost of building materials and credit.
Kazakh authorities allocated some US .5 billion in the last two years to housing and all waiting buyers should get their house within 2009.
More generally economic growth slowed last year to “only” 8.5 per cent, down from 10.7 per cent a year before.
Inflation ran at 18.8 per cent in 2007 with the latest official forecast putting it within the range of 7.9-9.9 per cent for this year. However, many experts believe the government “adjusted” the real figures so as not to alarm the population and foreign investors.
In its Fact Sheet on Kazakhstan for 2008, the Asian Development Bank singled out both inflation and the banking sector as areas of concern.
Overall, the economy appears too dependent on energy and state intervention. Private investment remains too little.
Although “[s]trong prices for oil, gas, and minerals; the rapid growth of domestic consumption; and a rebound in investment continued to propel Kazakhstan's economy in 2007,” the country faced some “challenges, including the immediate need to control rising inflation and to improve the performance of the country's banks in a challenging environment.”
Known as the breadbasket of Central Asia, Kazakhstan’s grain harvest was lower this year compared to last year’s figure, roughly 17 million tonnes against 20.1.
This has led the government to take an increasingly interventionist stance. Nazarbayev warned that anyone “who wants to use the current situation for their narrow and also political aims, spreading various provocative rumours, should expect a harsh punishment”.
For his part Prime Minister Masimov said that the government had “carte blanche to carry out a program to stabilise the economy and financial system, and wide powers to make non-standard decisions.”
For experts this is a sign of how much Kazakh rulers are concerned that domestic inflation and world crisis might negatively affect the economy and lead to popular unrest and protest.
However, it might also reduce trade with countries affected by the crisis, especially the United States, and increase ties with emerging powers like China and India.
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