Kazakhstan develops plan for supporting economy
Today the government of Kazakhstan and the National Bank adopted a plan of measures in the context of shifting to inflation targeting, the press service of the republic’s Prime Minister reported.
According to the Minister of National Economy, Erbolat Dosayev, the plan of measures requires that the activities of the government and the National Bank will be focused on support for the real sector of the economy and encouragement of private investments, creation of jobs, supporting financial stability, effective use of the National Fund resources, and providing a balanced budget.
The Minister stressed that “in the context of limited financial resources, optimization of financing of state programs will be provided; and resources will be allocated to priority directions.” The plan of measures also requires prevention of a growth in prices for socially important goods.
On Thursday Kazakhstan began providing a new monetary policy based on a free-floating exchange rate of the tenge. The currency band was cancelled. After the news was announced, the market rate of the Kazakh national currency decreased to 255.26 tenges for $1, i.e. devalued 26% in one day. The President of Kazakhstan, Nursultan Nazarbayev, stated there was no alternative. The step was taken at the request of Kazakh business; the current measure will enable the competitiveness of the country’s economy to be restored and save reserves. Moreover, he promised to punish any businesses for an unreasonable growth in prices, especially for food.
Nazarbayev warned citizens about “complicated years” which were coming and urged them to learn to live “with low oil prices.”
Experts believe that devaluation of the tenge could become an additional pressing factor on the ruble; but it won’t influence the Russian economy significantly. At the same time, the trade turnover between Russia and Kazakhstan may grow.