Inflation, Currency Volatility Among Key Risks for Kazakh Economy, Tokayev Says

NUR-SULTAN – In his state of the nation address on Wednesday, President Kassym-Jomart Tokayev spoke about the economic consequences for Kazakhstan’s economy stemming from Western sanctions imposed on Russia. Spikes in food prices and currency volatility are among those challenges, he said.

President delivering his address in the Parliament. Photo credit: Akorda

“Kazakhstan is facing unprecedented financial and economic difficulties in our modern history due to the escalation of the geopolitical situation. The harsh sanctions confrontation is already causing serious costs not only for individual countries but also for the entire global economy. The situation is changing rapidly, literally every hour. Uncertainty and turbulence in the world markets are growing, and production and trade chains are collapsing,” Tokayev said.

To ensure the country’s food security, he told the government to oversee the quality of the upcoming sowing campaign and make sure they are ready for it, including fuel, agricultural equipment, stocks of seeds, and fertilizers.

President Tokayev also mentioned his March 14 decree that restricted the export of cash foreign currency in an amount exceeding the equivalent of US$10,000 and gold bars in excess of 100 grams. 

The country’s financial market and its national currency tenge felt a big strain after the West imposed sanctions on Russia, Kazakhstan’s largest trade partner. This immediately sent the tenge’s value falling down and the National Bank had to intervene, injecting US$198.9 million on March 9 alone despite the floating exchange rate that Kazakhstan has adopted since 2015.

“Large institutional players should buy foreign currency only as part of their contractual obligations, ensuring its supply. We need to work on increasing the sales of foreign currency export earnings by companies with state participation. I expect private subsoil users will also provide sales of their foreign currency proceeds. As part of their contractual obligations, the second-tier banks should control and monitor the purchase of foreign currency by their customers,” said Tokayev.

He also assured the public there is “no reason to panic” because Kazakhstan possesses the necessary reserves to overcome the large-scale crisis. Noting the “geopolitical storm,” Tokkayev said it is now the time to build unity in the international community.

President’s state-of-the-nation address mainly focused on political reforms, including the simplification of party registration procedures and the transformation of the distribution of power from the “super presidential system to a presidential system with a strong Parliament.”

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