From Petroleum Towards Investments

The political week in Kazakhstan began with a speech by the president of the republic, the nation’s leader Nursultan Nazarbayev, to appeal to his people.

The message was largely conventional, with the Head of State outlining the political and economic goals and tasks facing the country. However, it is worth noting a number of points that characterise the current situation in Kazakhstan and in the world.

15.12.14 Astana. Astana Opera House. During the solemn meeting, devoted to the Day of Independence of KazakhstanOne of the hallmarks of the Kazakh leader’s speech is the absence of excessive optimism and a realistic view of things.

Now the world is changing rapidly, – Nursultan Nazarbayev noted. – Beneath our very eyes, a new reality with different opportunities and risks is arising.

 For those the President of Kazakhstan took the global economic crisis, which has become a source of instability on the financial markets of the world, such as a hydrocarbon, metal and food markets, etc., and as a consequence, a decrease of Kazakhstan’s exports and slowing economic growth.

Today there is no oil revenue, – the leader of Kazakhstan summed up bluntly. According to him, the global economy is under pressure from political factors. The world has become unstable. Major powers have imposed sanctions against each other. The confidence w between them has been undermined. Instability and conflicts in the Middle East, North and Central Africa led to massive flows of refugees. Today, a serious threat to the world is international terrorism. This is the result of destruction of statehood by the interference of external forces in the internal affairs of sovereign states. Where there is no state, there is no power; bandits, extremists and terrorists feel free, as occurs.

As Nazarbayev said, now it is the development of the world against the backdrop of fierce competition of global and regional centers of power. In order to survive, the country needs to be economically strong and politically stable.

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Kazakhstan has the experience of survival, since the days of attainment of independence. The collapse of the USSR, the life “without oil” and the crises of the late ’90s forced the authorities to develop a tough, but the effective strategy of existence. It has allowed the country to hold it and then in the late 2000s blossom.

– The large-scale privatization and the arrival of most multinational companies in our economy, – the Kazakh leader reminded his audience. At that time, Kazakhs had taken over the construction of a new capital, Astana, the Caspian Pipeline Consortium had started working and Strategy “Kazakhstan – 2030” had launched. The importance of the decision to establish the National Fund had become absolutely clear, when the global financial crisis of 2007-2009 erupted. Almost $ 20 billion, which is 14 percent of Kazakhstan’s GDP, had been allocated for the maintenance of employment, repair and construction of roads, improvement of cities and villages. The help was received by the banking sector, farmers, small and medium businesses.

The Government of Kazakhstan has developed and consistently implemented two Anti-crisis plans. From the oil production the country it has reoriented to the industrial and innovative developments, legislation underwent significant changes, during the fall of “oil” prices to 20-30 dollars per barrels, the tactics were thought out. But there were also negative factors, in particular, the forced transition to a floating exchange rate of Tenge.

Now and in any other time, our main anti-crisis stratagem is identical to the three simple but important concepts: growth, reforms and development, – said the President of Kazakhstan.

First of all, for that Kazakhstan needs to stabilize its own financial system, and to strengthen the Tenge exchange rate, as its support of the National Bank cannot be eternal.

Nazarbayev proposed to the National Bank to conduct stress testing of all subjects of the banking sector on the subject of non-performing loans. By its results, the measures will be taken to their recognition and written-off. Organisations that fail to solve the problem of capitalization, will leave the financial system. Kazakh banks have to comply with all international standards, including the Basel Committee and the International Monetary Fund.

The main allies of strengthening the position of the national currency should be the very population.

     – Kazakhs need to get used to living on the basis of the tenge, – Nursultan Nazarbayev emphasised. – We buy bread and clothes in tenge; keeping money in tenge is profitable for more percentage growth, since the interest for deposits in dollars will be very low. We will use the “tenge” in our lexicon and we live using tenge. Then calm will  be in the country.