OREANDA-NEWS. November 13, 2007. Amid instability at global financial markets Kazakh Government is confident that the country’s economic growth rate next year will remain at a high enough level, reported the Official website http://en.government.kz.

This year’s economic growth indicators are a sign of Kazakhstan’s strong positions. During three quarters of 2007 real GDP growth made up 109,7% year-on-year.

There are no reasons or preconditions for an internal financial crisis as no fundamental indicators have changed.

Reduction of gold reserves of the National Bank takes place alongside with growth of assets of the National Fund. Their combined amount exceeds USD 37 billion (about 42% of the GDP).

Banks are operating in their normal mode. In spite of a decrease in funding bank continue to extend credits. During 10 months of 2007 extended credits grew by 53,8%, with August-October responsible for 4,9% growth.

Generally speaking, Kazakh banking sector timely and appropriately reacted to changes in the situation. Requirements to borrowers have been toughened, work is being carried out to restructure credits, and measures are being taken to improve the quality of the loan portfolio.
 
The Government and the National Bank evaluate risks adequately. As a short-term stabilization measure the National Bank is granting liquid funds to the banks to refinance their debts. In order to ensure socio-economic stability and sustain economic growth rate the Government will allocate funds from the budget on repayment basis. By the end of 2007 USD 1 billion will be allocated, while the year 2008 will see allocation of at least USD 3 billion.

These funds will be used:

-first of all to protect the rights of citizens with ownership contributions into housing construction and to maintain stability of the mortgage market;

-secondly to continue funding of S&MBs projects on reasonable conditions;

-thirdly, to fund promising investment projects that are of great significance for diversification of the economy.

The said funds will be allocated not to aid the Kazakh banks or financial organizations, but to aid the real sector, while banks will be made financial mediators in utilization of these funds. Co-financing, partnership between state and business, prudent sharing of risks and responsibility will become the key principles of the state aid rendering.

Besides, the Government decided to amend to Law on Ownership Contributions in Housing Construction to enhance transparency of construction companies’ operations and introduce additional means of protecting participants of participatory share construction.

According to the Government’s estimates economic growth rate in 2008 will no go below 5-7%.

This will be propelled by high prices for Kazakhstan’s main exports, such as oil, metals and wheat. Dynamic development of export-oriented sectors of the economy will support other sectors as well as development of S&MBs.

Kazakh economy has sufficient internal reserves for investments. In conditions of limited access to external financial resources growth of household and corporate deposits will become an important source of credits to the economy.

To curb inflation the National Bank will continue carrying out moderately tough monetary policies, while the Government will ensure balanced fiscal policies.

The Government will continue consistent reforms intended to improve the country’s investment climate and modernize public management system. Special attention will be paid to strengthening of competition and improving infrastructure: electric power industry, railroad and motor transport, telecommunications and communications. These measures will help raise efficiency of the economy and ensure general diversification.

Alongside with the National Bank and the Agency for Financial Supervision the Government will take measures to decrease external debt of the banking sector. External loans will be allowed with due consideration of ensuring sustainable development of the country.

The banking sector will continue working on improving the quality of the loan portfolio, introduction of efficient risk management methods and corporate governance principles.

The Kazakh Government will continue monitoring the financial situation to ensure that prudent measures are taken.