Kazakh government develops anti-crisis plan

/By AzerNews/

By Aynur Karimova

Kazakh President Nursultan Nazarbayev has delivered his annual State-of-the-Nation Address on November 30 where he revealed the government's plans on most important issues.

He said that Kazakhstan has developed an anti-crisis plan in case of decline of world oil prices to $20-$30 per barrel.

International financial institutions expect average price of Brent oil at $55-$58 per barrel. The International Monetary Fund reports that break-even oil price for Kazakhstan at $79.4 per barrel in 2015 and $86 per barrel - in 2016.

Nazarbayev said that the new economic sectors are becoming the drivers of Kazakhstan's economic growth.

"In the last five years, the manufacturing industry increased by 1.3 times, chemical industry and production of construction materials - by 1.7 times. Production of engineering goods increased by 2.2 times, while their exports - by three-fold. Also, more than 800 industrial projects have been implemented," he added.

Nazarbayev also pointed out the main goals for Kazakhstan in the next decade, in particular, to provide an annual economic growth at the level of five percent, to double the export of processed goods in comparison with 2015 and bring it to $30 billion a year, to increase the annual volume of investment in the economy by more than $10 billion, and in general for 10 years - no less than $100 billion, to create more than 660,000 new jobs, and to double the productivity.

"Only diversified economy could effectively withstand the consequences of the global crisis," he believes.

Nazarbayev also stressed the importance to attract private investment from the transnational corporations and to create a favorable environment in the country for attracting "difficult investment."

In this regard, he instructed the government to submit a detailed plan to improve the investment climate within three months. He also instructed the government to establish a governmental council, engaged in attracting investors and improving the investment climate, as well as similar councils for attracting investment in the regions to implement projects of local significance.

Giant national holdings may be liquidated

President Nazarbayev also did not rule out the possibility of liquidating such national holdings as Samruk Kazyna, Baiterek and KazAgro after privatization.

These holdings will be featured into the new program of privatization after which they either will be transformed into lean and mean organizations or liquidated.

Nazarbayev said that the privatization process should be transparent and fair, and charged the government to abolish all ineffective tax preferences.

“We need to review the entire system of governmental revenues and expenditures,” he noted. “First of all, we need to expand the revenue part of the budget. In 2017 we should introduce sales tax instead of VAT. All inefficient tax preferences must be abolished.”

Nazarbayev also stressed the importance to optimize tax regimes and create three levels of taxation: general tax, patent for self-employed people and special tax regime for SMEs and agricultural sector.

Stress testing important

President Nazarbayev also urged Kazakhstan's National Bank to perform stress testing of entities within the national banking sector.

"The National Bank should conduct stress testing of all entities within the national banking sector concerning non-performing loans," he stated.

Nazarbayev said that the banks unable to solve the capitalization problem should leave the financial system, adding Kazakh banks should comply with all international standards.

In July 2015, the tenge rate was 186.8 tenge per dollar.

Tenge started devaluating on August 20 when the National Bank of Kazakhstan abolished the currency corridor for tenge and switched to inflation targeting and a free floating rate to ensure the implementation of a new monetary policy. As a result, tenge lost some 30 percent of its value.

In September and October 2015, the National Bank abandoned the transition to a free-floating tenge rate and started to sell currency instead. The bank’s share in the currency market reached 60 percent. Kazakh National Fund and the National Bank sold more than $5 billion in this period.

Kazakhstan’s National Bank said on November 5 that it will minimize its participation in the currency market in order to maintain its own and the National Fund’s gold-exchange assets. As a result, the exchange rate of tenge fell sharply from 298.92 tenges per dollar on November 5 to 307.53 tenges per dollar on November 6.

Over the past two years, tenge lost more than half of its value. In early 2014 exchange rate of tenge was at 154.06 tenge/dollar.