Victoria Panfilova, an observer of Nezavisimaya Gazeta. Exclusively for Vestnik Kavkaza
The Kazakhstani authorities are attentively following oil prices and the financial crisis in Russia. Ordinary citizens and businessmen of the country are expecting a devaluation. In Kazakhstan it is thought that the nascent panic in Russia could bring down the tenge. Moreover, analysts of Saxo Bank predict a default in Russia in 2015. Dosym Satpayev, the director of the Kazakhstan Risk Assessment Group, thinks this would have the most negative consequences for Kazakhstan, which is united in a common economic space with Russia.
Olzhas Khudaybergenov, an advisor to the chairman of the National Bank of Kazakhstan, tries to calm the population that there will be no devaluation of the tenge due to the fall of the ruble and oil prices. “You can spend the New Year holiday calmly, whatever is happening with the ruble and oil,” he said. However, Kazakh financial experts aren’t making any forecasts and are waiting for the ruble to reach the bottom, and only then will they decide what to do.
Khudaybergenov thinks that the Russian Central Bank’s activities on stabilization of the ruble are insufficient. The expert says that the ruble has crossed all possible psychological levels, and now we can state that the Russian economy is turning from smoldering recession to a wide-scale crisis.
Kazakhstan experienced a sharp fall in its national currency due to a drop in oil prices in early 2014. In February the National Bank decided to undertake a devaluation of the tenge, when the oil price was less than $80 per barrel. The head of the National Bank, Kayrat Kelimbetov, took an unpopular decision – he rejected supporting the tenge exchange rate at the previous level, reduced volumes of exchange rate interventions and limited interference in the process of forming the tenge exchange rate. The national currency lost 25% at once. But the measure provided the tenge with a factor of safety.
The next step by the Kazakh authorities was using the safety net. In November President Nursultan Nazarbayev spoke about further challenges. According to him, Kazakhstan should be ready for any troubles which could be caused by the situation on the world market. “The architecture of the world will change. Not all states will withstand decently. Only powerful, united nations and countries will cross the line,” Nazarbayev said. To soften the blow to the republic’s economy, he announced readiness to create a National Fund (NF).
Nazarbayev ordered the government to allocate up to $3 billion to development of the economy – transport, energy, banking spheres, small and medium-sized business – during 2015-2017. The head of state suggests reconstructing the economy, focusing on development of infrastructure.
Thus, the second key direction of allocation of additional resources is infrastructural projects. Nazarbayev intends to spend $2.7 billion on their fulfillment. According to him, it is necessary to create such a transport system that roads, railways and air routes would run from Astana to all places. U.S. President Roosevelt chose these directions to save the country from the Great Depression of the 1930s. Kazakhstan is not in depression and is taking radical steps.
Experts point out that Kazakhstan is the only state in the post-Soviet space which has long-term plans for its development. The strategic plan is an advantage for the country against other states who passed through the post-Soviet transit period.
Yuri Solobozov, the director of international programs of the Institute of National Strategy of Russia, told Vestnik Kavaza that Kazakhstan initially developed programs for the country’s development: the strategic development plan till 2020; Kazakhstan-2030; and the Strategy of Kazakhstan development till 2050, as well as programs of boosted development of Kazakhstan and the 30 corporative leaders of Kazakhstan.
“Nazarbayev thinks Kazakhstan has three main problems. First of all, it is providing peace in the region, as Kazakhstan cannot develop without it. Secondly, it is establishing an industrial foundation for the development of Kazakhstan. Kazakhstan cannot develop as a purely oil-producing country. Otherwise, the population of Kazakhstan should be four times smaller or they should produce four times more oil to become equal to Kuwait and the Arab Emirates. And the third task is to provide social peace. It means absence of stratification of the population into the poor and the wealthy,” Yuri Solobozov says.
He explained that these two tasks of establishing an industrial structure of modern Kazakhstan and creating new jobs will enable social lifting to work and reduce the social stratification which is inevitable for extractive states.
The program is divided into several five-year plans, which set certain tasks for branches. Whether Kazakhstan fulfilled the first five-year plan and managed to use the safety net, we will see, according to results which will be summed up on December 22nd 2014. The initial report is favorable, especially in the context of the world crisis.
“During the first five years, 672 projects of the Industrialization Map were fulfilled (300 of them have already stepped into a new capacity level), 69 thousand jobs were created; production of 325 new kinds of products was launched,” Aset Isekeshev, the vice-primer of the Kazakhstan government, stated.
Moreover, in a year Kazakhstan fulfilled the program called “100 schools, 100 hospitals.” The government intends to increase salaries of state employees from July 1st 2015. “In late 2014 a second increase in salaries is planned,” a source in the Kazakhstan government said. The official also stated that it had been decided to reconsider the budget on the basis of $40 per barrel.
Meanwhile, in early December Standard & Poor’s confirmed the sovereign ratings of Kazakhstan on foreign and national currency obligations at the level of BBB+/A-2 with “negative” forecast. According to S&P, Kazakhstan still depends on the oil sector, which provides 13% of the GDP directly, more than 50% of its revenues and 60% of its exports.
The IMF has recently reported that the slow pace of world economic development, oil prices falling, and shifting terms of extracting oil in Kashagan would lead to the fact that in 2015-2016 Kazakhstan’s economic growth will be 4.5 to 5.5%. At the same time, it stressed: “Risks on the forecast are connected with its probable worsening, which is determined by oil prices and the unstable situation in the region.”
