Economic news in brief

The government of Kazakhstan has set fixed prices on bread wheat, the country’s Prime Minister Serik Akhmetov said on Feb.17 in Astana at a meeting addressing recent orders given by President Nursultan Nazarbayev at an expanded government meeting on Feb.14. Ways of preventing a bread price hike were discussed at a state commission meeting last week, according to the prime minister. “The decision to provide the regions’ flour mills with food grain using state resources at fixed prices was made. We have set the price of food grain at 30,000 tenge (US$162) per tonne,” the prime minister said. It was earlier reported that on Feb. 11 the National Bank of Kazakhstan stated that the tenge had devalued by around 19 percent. Nazarbayev issued an order at the Feb. 14 government meeting enacting measures to prevent staple foods from rising in price. During the meeting, Akhmetov also emphasised the need to assure the stability of staple food and basic good prices such as lubricants and pharmaceuticals. He also stressed the need to prevent product shortages and the unjustified growth of tariffs from major monopolies. Additionally, tariffs on communal services will be frozen until May 1 across Kazakhstan. “Concrete measures have already been formulated and now it is time to implement them and establish tight control over their application,” the prime minister added.

End-use borrowers of Development Bank of Kazakhstan (DBK) funds under the State Programme of Industrial and Innovative Development (SPAIID) will likely not face the risks that borrowed money generally carries as long as DBK loans to commercial banks for financing industrial projects are not tied to the exchange rate, the DBK press service reported on Feb. 20. DBK granted five local commercial banks (KazKom, Bank CenterCredit, Sberbank, Alfa Bank and Tsesnabank) loans totalling 45 billion tenge (US$243 million) for lending activities. “The bank grants loans to commercial banks in tenge. Accordingly, it was decided that our partner banks would extend credit to end-use borrowers under the same conditions. End-use borrowers are of special importance to DBK. They should not bear currency risks,” acting Chairman of the Board of DBK Askar Dostiyarov said.

On Feb. 18, President Nursultan Nazarbayev signed the law “On ratification of the agreement between the Government of the Republic of Kazakhstan and the Government of the Socialist Republic of Vietnam on encouragement and mutual protection of investments,” reported the press service of the President. That agreement was signed on Sept. 15, 2009 in Astana. Its purpose is to improve the investment climate in relation to mutual investments by providing guarantees to investors in addition to those provided by the applicable legislation. The agreement is not applied to taxation, public procurement, subsidies or grants issued by the contracting party, and services provided for implementation of state functions by the body or agency of the contracting party. According to the document, each contracting party shall encourage and create favourable conditions in its territory for investments of investors of the other contracting party and admit such investments in accordance with the national law of the country. Minister of Economy and Budget Planning Yerbolat Dossayev noted when submitting the document to Parliament, “The agreement also contains provisions which regulate in detail the procedure for the formation of an international tribunal established for resolving disputes between the parties.” Dossayev reported that investment cooperation in the oil and gas sector between KazMunayGas and PetroVietnam is especially promising.

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