Government Reports on Development Progress, Defines Plans to Promote Sustainable Growth

ASTANA – Kazakhstan’s social and economic development in the first half of 2014 was the focus of an enlarged government session on Aug. 6, during which the country’s most significant government restructuring to date was also announced. Ministers and other speakers reported on plans to protect the country against fallout from the ongoing conflict in Ukraine, development programmes for business, energy production and use and other topics.

БезымянныйSenior officials including Bakytzhan Sagintayev, Asset Issekeshev, Tamara Duissenova, Yerbolat Dossayev, Umirzak Shukeyev and Kuandyk Bishimbayev, some of whom were subsequently shifted into new positions, delivered reports to President Nursultan Nazarbayev.

Reporting on the banking sector and economic progress, First Deputy Prime Minister Bakhytzhan Sagintayev, who has retained his post, said a number of measures have been taken to ensure economic growth and large-scale support of businesses in the country.

“The National Fund of Kazakhstan has allocated 50.5 billion tenge (US$277.4 million) for small and medium-sized businesses. An initiative to allocate resources from the National Fund voiced earlier by President Nazarbayev has served as a major impetus for the following economic growth,” he noted.

In order to ensure efficient and transparent use of the funds provided by the National Fund, framework agreements were signed with four international organisations, including the World Bank, the International Bank for Reconstruction and Development, the Asian Development Bank and the Islamic Development Bank. The agreements stipulate institutional and financial support for priority development programmes in the amount of US$7 billion.

“We have identified the key investment projects in major sectors of the economy, which, according to preliminary estimates, account for US$5.5 billion. The banks have approved 327 projects worth 76 billion tenge (US$417.5 million), out of which 218 projects have already been financed with 50.5 billion tenge (US$277.4 million),” Sagintayev said. Another 150 projects are being worked upon, while additional resources have been allocated for 467 projects within the Business Road Map 2020 programme.

Former Minister of Labour and Social Protection Tamara Duissenova, now head of the new Ministry of Health and Social Development, said 13,000 oralman (repatriated ethnic Kazakhs) families have come to Kazakhstan in 2014. The total number of ethnic Kazakhs who have immigrated to the country this year is 35,000 people. “Their accommodation is also provided within the Business Road Map 2020,” she noted.

“In September 2014, a draft law dealing with the problems of oralmans’ accommodation will be submitted to Parliament for consideration,” Duissenova said.

Chairman of the Board of the Samruk Kazyna National Welfare Fund Umirzak Shukeyev informed his colleagues of plans to build two hotels with a total capacity of up to 1,500 persons in Kenderli on the Caspian seashore in western Kazakhstan within the next two years.

Then-Deputy Prime Minister and Minister of Industry and New Technologies Asset Issekeshev, now head of the new Ministry for Investments and Development, said the industrial sector consumes 70 percent of Kazakhstan’s electricity.

“For instance, the country’s population consumes 12 percent, while the transport sector [uses] 5 percent. At the same time, the 50 largest industrial enterprises consume about 40 percent of the country’s energy resources, and we are working with them on an individual basis,” he noted.

Yerbolat Dossayev, erstwhile minister of economy and budget planning and now head of the new Ministry of National Economy, said Kazakhstan has worked out a separate action plan to mitigate the effects of the ongoing crisis Ukraine.

“Together with government agencies, we have developed an anti-crisis plan dependent on further development of the national economy. We have also drawn up a special action plan in case further sanctions are introduced against Russia and the situation in Ukraine deteriorates. This plan will be updated in September 2014,” Dossayev told the President.

“In order to support the basic sectors of the economy, we have introduced a mechanism for providing a temporary reduction of tariffs for rail freight for Arcelor Mittal, the CNPC [China National Petroleum Corporation] and Kazakhstan Aluminium,” he noted.

The government has also reduced taxes on natural resources production for deposits characterised by heavy mining conditions and low profitability, including Kazakhmys in the Zhezkazgan region and Karazhanbas in the Mangistau region.

“Aiming to compensate oil volume variations related to the delayed extraction at the Kashagan field, an agreement has been reached with the mining companies to maintain production volumes at the level of 2013, in the amount of 81.8 million tonnes [a year],” Dossayev said.

On the whole, domestic demand has enabled growth of gross domestic product, including through an increase in investment activity. “Thus, Kazakhstan’s fixed assets investment growth has amounted to 5.3 percent,” Dossayev said.

At the end of July 2014, Kazakhstan’s total international reserves exceeded US$104 billion; including gold and currency reserves in the amount of US$27.7 billion, and the assets of the National Fund totalling US$76.3 billion.

“Due to the timely adjustment of the tenge exchange rate, the inflation rate in Kazakhstan was recorded at 4.9 percent in August 2014. Food prices rose by 5.4 percent, prices for non-food products rose by 5.0 percent and prices for services moved up 4.3 percent,” the minister said.

Chairman of the Baiterek National Holding Kuandyk Bishimbayev reported that nearly 50 percent of all Industrialisation Map projects are now funded by the Development Bank of Kazakhstan.

“According to the new five-year plan, we are now working with the Ministry of Industry on a list of projects. We have assessed 340 projects across the country, after which about 50 projects were selected. Twenty-six projects were chosen in cooperation with international financial institutions. The final list will be submitted to the government in September or October of this year,” he said.

In 2014, restrictions were lifted on the use of authorised capital of the Development Bank of Kazakhstan, which released up to 250 billion tenge (US$1.37 billion), which was previously deposited into bank accounts.

“These measures also made it possible to reduce interest rates and increase financing terms. Whereas earlier the Development Bank of Kazakhstan issued loans with rates of 8-9 percent for a period of 7-10 years, now the new loan rates range from 5.5-8 percent and are given for a period of 15-20 years,” Bishimbayev noted.

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