Country Study, KAZAKHSTAN — страница 2

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and subsidies to farms and state owned enterprises. (Banks and Banking in Kazakhstan, November 1995) On September 25, 1995, the Bank and Banking Activity Law was passed by presidential decree, giving additional responsibilities to the NBK. The new law allows the NBK to issue licenses to banks. Importantly, it also permits foreign capital to enter into the banking system. However, it places restriction upon foreign banks wishing to enter the country. (Am. Embassy Rpt., October 1995) In an effort to strengthen the national banking system several mergers have taken place, presumably to prepare the system to withstand the entrance of foreign banks into Kazakhstan. Budgetary Trends Despite these serious developments there has been some headway in reforming fiscal policy. Some main

extrabudgetary funds have been incorporated into the budget and the project to set up a Treasury is complete. Throughout 1993 and 1994 efforts focused on containing the overall fiscal budget deficit. In 1993, the government made significant improvements over 1992 in expenditure control and revenue collection. The overall budget deficit was just 1.2% of the GDP, as compared with the 7.4% in 1992. Most of the deficit was financed through borrowing, sales of treasury bills, and foreign financing. (Kazakhstan: The Transition to a Market Economy, 24) 1994 saw a sharp increase in the deficit over the previous year at 6.8%. The extrabudgetary funds widened to include the Road Fund, the Employment Fund, the Pension Fund, the Social Insurance Fund, the Fund for the Protection of Natural

Resources, and the Fund for Promoting Entrepreneurship. However, in mid-1994 the Pension Fund was detached from the budget. The inclusion of these funds is important to ascertaining the extent of government liabilities, without which the deficit numbers will continue to be skewed. The deficit target for 1994 was 4.6% of GDP. The gap between the actual and predicted deficit is accounted for by unexpected expenditures and declining revenues. (Kazakhstan : IMF Economic Reviews, 17) In 1995, Kazakhstan had many difficulties with some sixty enterprises that defaulted on loans guaranteed by the government. The Deputy Prime Minister expects that the government will have to repay the obligations out of budgetary appropriations. This type of problem is common to transition economies,

which privatized poorly managed enterprises. Kazakhstan also experienced continuing inflationary problems with an annual rate of 60.3%, and the tenge continued to fall against the dollar. The Treasury project finally received approval and began the process of transition. The Treasury was established as part of the Ministry of Finance, rather than the Ministry of Economics, perhaps signaling a shift in budgetary power. President Nazarbayev struck back by criticizing the lack of ìproper coordination among the activities of the economic ministries, the government, and the national bank.î(Am. Embassy Rpt., December 1995) He cited the lack of coordination of macroeconomic policies at the regional level, as the reason for his censure. Following elections in 1995, the

legislature also created several new committees to oversee and facilitate the budgetary process. The economic, finance, and budget committees were instituted as a means to check the growing power of the President in budgetary issues. The Prime Minister summarized the three primary features of the economic policy: 1) to defeat inflation, 2) to roll back certain legislation passed by the previous parliament, which could not be supported under current conditions, and 3) to increase government financing to non-producing sectors. This approach signaled the shift towards concentrating on entitlement programs. (Am. Embassy Rpt., January 1996) In 1996, President Nazarbayev struck back at the legislature by Issuing a decree which established an economic commission and effectively

neutralizing the legislatureís monetary policy influence. The edict placed the NBK firmly under the Presidentís authority and erased all mention of Parliament from the constitution. With this decree, the President can change monetary policy or allocation of credits at will. (Am. Embassy Rpt., January 1996) Other significant developments in 1996 were the shift to a focus on investment, from inflationary stability, and the establishment of accounting reform measures. Another important focus was on substantially increasing minimum wages, as well as pensions and allowances. Social protection issues will likely dominate the foreseeable future. The Shadow Economy in Kazakhstan In Kazakhstan estimates on the shadow economy range from the conservative to the outrageous.