The collapse at the request of the workers: what will come out of the devaluation in Kazakhstan

The large-scale devaluation in Kazakhstan will help its economy to narrow the gap in competitiveness with Russia, formed due to the fall of the ruble. But the risks of protests against the leader of the nation will also increase.
21.08.2015
RBC
Origin source
Kazakhstan, Central Asia's largest economy and the second after Russia's largest oil producer in the former Soviet Union, on Thursday strongly entered into a global race devaluations, weakening its currency once a quarter. Government and National Bank, faced with the effects of falling oil prices and metals (accounting for about 80% of exports), abolished the currency corridor, went to a free floating exchange rate regime and inflation targeting. The previous regime - managed floating exchange rate - has existed since February 2011. After the announcement of the official US dollar to tenge at KASE Exchange jumped to 255.26 tenge (about 188 per dollar from the previous day), ie Kazakhstan's currency fell by 26%.

As the Prime Minister of Kazakhstan Karim Massimov, the tenge, "calm down" for 5-7 days. During the evening session on KASE currency tenge corrected to 252.26 per dollar. The authorities pulled to the last, but resumed in the summer drop in oil prices, the depreciation of the Russian ruble by almost half over the past year and the coming increase in the US Fed (the first since 2006) no ostavili Kazakhstan choice. "The decision to devalue the tenge was expected", - said RBC's former finance minister and ex-head of the National Bank of Kazakhstan, and now director of the Center for Economic Analysis "Perspective" Oraz Jandosov. According to him, the authorities have tightened somewhat with the introduction of the free course - it has happened only three months after the presidential election, which won for the fifth time, Nursultan Nazarbayev.

The catalyst for the reform of the currency served as an unexpected devaluation of the Chinese yuan by about 4% last week. It has caused a chain reaction in the form of lower exchange rates in developing countries - from Korea to Vietnam. As China goes up to 20% of Kazakhstan's exports, and the devaluation of the yuan reduced the benefit of Kazakhstan's exporters. Even more lost Kazakhstan to trade with Russia, whose currency has depreciated over the past year against the dollar by almost half.

Socio-economic indicators of Kazakhstan

According to the IMF forecast for 2015,

2% will be Kazakhstan's GDP growth in 2015

$ 211.7 billion - nominal GDP

5.2% - inflation

-3.2% Of GDP - aboutof its budget surplus

$ 168.9 billion, or 79.8% of GDP, external debt reached. This is $ 11.8 billion more than in 2014.

$ 60 billion, will be the volume of Kazakhstan's exports (- $ 25.4 billion in 2014). Of these, $ 32.7 billion would be for export of oil and gas condensate.

1.68 million barrels. The IMF estimates the daily production of oil and gas condensate in Kazakhstan for the year

According to the Ministry of National Economy of Kazakhstan

17.5 million people lived in Kazakhstan of July 1, 2015, of which 9.97 million (56.8%) - the urban population

4.9% - the level of unemployment in the country as of July

126.71 th. KZT, or $ 501.7 at the exchange rate as of August 20 was the average monthly wage in Kazakhstan in July

Source: IMF, the Committee on Statistics of the Ministry of National Economy of Kazakhstan

Keep up with Russia

In April the newspaper "Kommersant" wrote that between the Customs Union partners, a trade war is unfolding: depreciating due to the devaluation of the ruble Russian goods (candy, butter, meat) were withdrawn from trading networks under the pretext of re mismatchglamentam. According to the newspaper, the National Chamber of Entrepreneurs of Kazakhstan at the end of January has analyzed the effects of devaluation of the local economy and concluded that only in the agricultural sector under attack were the production of poultry meat, eggs, flour and pasta, juices and other products. Trade turnover between Russia and Kazakhstan fell sharply exports from Kazakhstan to Russia in the first half of 2015 decreased by 27%, while imports from Russia fell by 18% compared to the same period of 2014 (data from the Kazakh Statistics Committee).

Prior to this, Kazakhstan devalued the tenge in February 2014, recalls Alexander Knobel, Head of the Laboratory of International Trade Economic Policy Institute. Gaidar. "After that, the possibility of Russian exporters fell as it became expensive to import products and increased competitiveness of Kazakh producers," - he said. Then there was a devaluation of the ruble, and has, on the contrary, the Russian manufacturers, especially in the food industry and agriculture, to gain a competitive advantage.Now there is a change with respect to competitiveness in the opposite direction, says Knobel.

Jandosov from the center "Perspective" believes that the devaluation in the short term will stimulate the economy of Kazakhstan. "Kazakh products will become more competitive. Previously, due to the devaluation of the ruble Russian products more attractive, "- said the expert. Agrees with him Timothy Ash of Nomura Holdings: «On the whole, this is a positive for Kazakhstan, good decision; they need to compensate for the fact that all the currencies around the become much cheaper in recent months, and may even go down in value in the coming months. " This Esch sure there will be no speculative attacks on the tenge, as the country has at the disposal of almost $ 100 billion of foreign exchange reserves (including assets of the National Fund of the Republic of Kazakhstan) - 46% of GDP last year.

Kazakhstan became another country whose currency is not sustained, depending on the falling oil prices: on Thursday released into free floating tenge has fallen by 26%. RBC compared as cheaper currencies of the countries most dependent on exportsoil. According to the Trade and Development to the United Nations Conference (UNCTAD), in two dozen states the net oil exports on average over 2010-2013 exceeds 10% of GDP. Of these countries support the official part of the currency peg to the dollar (Saudi Arabia and other Gulf States, Venezuela) or the official exchange rate is strongly at odds with the rate on the black market (Iran), so that these countries are not considered. Of the remaining seven countries, the Russian ruble has fallen the most in the period from June 19, 2014, when the price of Brent crude oil reached a peak ($ ​​115.06 per barrel), and began to decline. Brent since prices dropped by 60%.

Russian experts agree the opinion that a significant impact on the devaluation of tenge will not have the Russian economy. "We devalue they devalue - in our mutual trade relations do not happen", - says Natalya Volchkova, a professor at the New Economic School. Economy of Kazakhstan and Russia are dependent on oil, and now the devaluation will be more harmonious, "the relative value of our currency is approximately constant."

Automakers in Kazakhstanalso reported that the hope to increase exports due to the country's transition to a free floating exchange rate. The devaluation of the tenge is unlikely to have a major impact on the Russian automotive market, believes Sergei removed, the executive director of the analytical agency "AUTOSTAT". For the Kazakh market is more important, he explains, because now it will no longer fall into "gray" machines that have flowed into the country due to the devaluation of the ruble. This is a loss for the Russian companies, but on the scale of the entire market is insignificant.

Kazakhstan and Russia in the economic ratings

Kazakhstan and Russia are equally strongly dependent on commodity prices. But in a number of the world rankings quality of Kazakhstan's economy ahead of Russia. The annual Index of Economic Freedom by the US Heritage Foundation Research Institute of Kazakhstan is located at 69 th place (Russia - only 143 m).

In the ranking of competitiveness in 2014-2015 by the World Economic Forum, Kazakhstan is on the 50th place, Russia ranks 53rd.

But in the ranking of ease of doing bznesa Doing Business, which prepares the World Bank, Russia occupies 62th place (out of 189), and Kazakhstan - 77th.

At the request of the workers

The decision to let go of tenge was made at the request of business and exporters, Nazarbayev confirmed on Thursday. "The decision, which was adopted by the Government and the National Bank, on the request of exporters, the National Chamber of Entrepreneurs" Atameken ", small and medium enterprises in our country. Thanks to the restoration of competitiveness of the country, we can preserve jobs in enterprises ", - Nazarbayev said (quoted by Nur.kz).

Kazakh producers suffered from low oil prices also because of the Central Bank of Kazakhstan, in contrast to the Bank of Russia maintained its currency relatively stable since February 2014 - after the previous one-time devaluation of 18%. "Therefore, labor costs for mining companies remained high in dollar terms," ​​- explains the analyst in Kazakhstan Economist Intelligence Unit Alex Nice portal EurasiaNet on 18 August. Some companies, such as the Sino-Kazakh drilling Great Wall, before the devaluationand started to reduce staff. Now jobs can be maintained, but the workers actually become poorer. It's a risk for Nazarbayev and his government, taking into account the lessons of the events in Zhanaozen in 2011, when local oil continuously on strike demanding salary increments. The protests escalated into riots that were suppressed by the authorities of blood.

The fact that any protest action will be stopped, Nazarbayev said on Thursday: "There may be people who are blackmailing banks, scream, yell at intersections - these people will stop" (quoted by Novosti-Kazakhstan). Nazarbayev was re-elected president for early elections in April 2015 with the result of almost 98% of the vote. Then RBC experts interviewed explained the need for early elections, the difficult economic situation and the desire to be re-elected president before the large-scale crisis.

In contrast to the devaluation in February 2014 the first part of the population could be prepared for the new, as talk of her going for a long time, actually since the autumn of last year. Nevertheless, many are outraged by today tm, which in recent years the authorities have promised to prevent a sharp devaluation, says RBC director of Kazakh Risk Assessment Group Dosym Satpayev. Nazarbayev himself promised in April: "Nothing will happen after the election of the <...> If something is planned, I'll tell you. And I'll tell how to protect themselves from this, beware "(in quotation Vesti.kz).

Distrust of the government intensified protests, too, but in the absence of a strong opposition protests have gone into social networks, and street protests to the economic difficulties are unlikely to lead, said Satpayev. Objective prerequisites for the protests there, confirmed the executive director of the center of the "North - South" Yulia Yakusheva: the government has already taken steps to preserve the benefits vulnerable people, promised indexation of social payments and the reduction in the solemn and branding expenditure will not increase salaries of officials and the payment of expenses top managers of national companies - all of these measures may reduce the possible intensity.

Plans Nation leader

In the pre-election program leader Mr.ation (Nazarbayev's official status since 2010) has promised to spend five institutional reforms, including to accelerate the formation of the middle class, to carry out a new industrialization and diversify the economy. In November last year, Nazarbayev presented the program of the new economic policy "Nurly Zhol" ( "Shining Path"), which should help the country to minimize the effect of falling oil revenues and create about 200 thousand. Jobs. On "Nurly Jol" Kazakhstan had planned to spend about 500 billion tenge (at the time of about $ 2.8 billion) from the state of the National Fund and the total cost of the program is estimated at $ 15 billion, planning to attract investments from the Asian Development Bank, European Bank for Reconstruction and Development , World Bank and Islamic Bank.

The program, designed for 2015-2019 years, includes both the cost of lending to small and medium-sized enterprises and support for the banking sector through the purchase of "bad" loans and financing of infrastructure, mainly transport and energy, projects. As part of the "Nurly Zhol" Kazhstan going to build and renovate more than 7 thousand kilometers of roads, to build a new terminal and reconstruction of the airport runway in Astana, to complete the construction of the transport corridor "Western Europe - Western China"., which in addition to further ties between Russia and Kazakhstan will help to link Kazakhstan's logistics facility - the "dry port "" Khorgos - Eastern gate "and seaport Aktau.

However, according to Zhandosova of "Perspective" center, though in recent years the government of Kazakhstan to carry out reforms aimed at reducing the bureaucracy, as well as economic transformation point, they can not be considered structural. The expert believes that the state program "New Industrialization" and "Nurly Zhol" had a positive impact on the economy of the country, but could not improve it dramatically.

Analysts of the World Bank noted that the program to support the economy will have a positive impact on the labor market, however, is unlikely to be able to counteract the reduction in the rate of growth of the economy, since the increase in the stateexpenditures offset by restricting monetary policy. In the medium term, say World Bank experts, the situation in Kazakhstan will continue to negatively impact the economic crisis in Russia, the slowdown of the Chinese economy and the reduction of hydrocarbon revenues.

Re-elected in April 2015, Nazarbayev announced the launch of structural reforms. Nazarbayev plan called "100 concrete steps" aimed at reforming the state apparatus, to achieve industrialization and economic growth, the development of integration with international financial markets and increased transparency of government institutions and reforming the social sphere. The program, in particular, is extremely impressed by the head of Sberbank German Gref: at the Astana Economic Forum in May, he said that he experienced "culture shock" during the reading of the document, and compared the reformist ambitions of Kazakhstan to Singapore.

However, according to Zhandosova, "100 steps" remain theoretical document. Specific bills under this program will be introduced in Parliament roofingof September.

"Anchor," which will help the country to adhere to the planned structural reforms could be the accession to the WTO (Nazarbayev signed an agreement on accession to the WTO at the end of July until October 31. Kazakhstan must ratify it), celebrated in July, rating agency Moody's. Membership in the WTO will help Kazakhstan to improve the business and investment climate and attract more foreign investment, experts say the agency. Also, it will help to create a more robust, market-oriented economy and will contribute to the Government of Kazakhstan's efforts to reduce dependence on oil and gas exports.

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