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kazakhstan

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KAZAKSTAN


REPUBLICAN REFERENCE

Area (sq.km) 
2,717,300 

Population
16,731,303

Principal 
ethnic groups 
Kazaks 44.3%
Russians 35.8%
Ukrainians 5.1%
Germans 3.6%
and many others

Capital 
Astana
(formerly Akmola)

Currency
Tenge

President 
Nursultan Nazarbayev

  

Background:
Native Kazaks, a mix of Turkic and Mongol nomadic tribes who migrated into the region in the 13th century, were rarely united as a single nation. The area was conquered by Russia in the 18th century and Kazakstan became a Soviet Republic in 1936. During the 1950s and 1960s agricultural "Virgin Lands" program, Soviet citizens were encouraged to help cultivate Kazakstan's northern pastures. This influx of immigrants (mostly Russians, but also some other deported nationalities) skewed the ethnic mixture and enabled non-Kazaks to outnumber natives. Independence has caused many of these newcomers to emigrate. Current issues include: developing a cohesive national identity; expanding the development of the country's vast energy resources and exporting them to world markets; and continuing to strengthen relations with neighbouring states and other foreign powers. 

Update No: 271 - (24/07/03)

New premier and government
On June 13th a new premier and government was appointed in Kazakstan. Daniyal Akhmetov, the new prime minister may hold his current position until the presidential elections scheduled for end-2006, said presidential advisor, Yermukhamet Yertsbayev.
"If we who support the president's strategic course and model of market reforms win the upcoming parliamentary elections, then the government will continue functioning until the presidential election campaign," Yertsbayev was quoted as saying.
Akhmetov replaced Imangali Tasmagambetov as premier, following the latter's resignation, which was brought on by a conflict with parliament over the draft land code.
The new cabinet was primarily established the week before last. "Two thirds of the key cabinet members remained unchanged," Yertysbayev was quoted as saying. "I did not expect any significant changes. In this case we cannot speak of Akhmetov's 'new team,'" he added. "The new government will primarily focus on market-oriented reforms, in particular microeconomic changes in the provinces." Yertysbayev noted the cabinet must curb unemployment to a minimum by carrying out economic reforms and creating new jobs. The government should also focus on introducing a programme for industrial development in the regions. Moreover, small- and medium-sized enterprises and local producers should be supported, he added.

Economy to continue fast growth
The new government is set to continue the rapid growth of GDP, which reached 10% annually in the early 2000s. Expansion will not be quite so rapid in the years ahead, but still well above the FSU average. The resource-rich republic, with abundant energy and primary commodity reserves (some 60% of the entire FSU total), has had the fastest growth of the former Soviet states for some time now, benefiting from the world energy boom since 1999.
Kazakstan estimates average annual GDP will rise by 7-7.5% in 2003-2006. "It is planned to ensure an average annual GDP increase of 7-7.5% in 2003-2006, an average annual increase of industrial production of 9-9.5%, with average annual inflation at 4.5-5.5%," Kazak Economy Minister, Kairat Kelimbetov, said at a government session.
Under the new government's programme, the percentage of people living below the poverty line is targeted to drop to 20% during that three-year period. "The government plans to ensure higher economic growth rates and increase people's real incomes," Kelimbetoc was quoted as saying. The former government pushed to gain an annual GDP increase of 5-7% between 2002-2004, raising GDP by a minimum of 20% by the end of 2004. It was planned to bring the per capita GDP level to US$1,600-1,700 by the end of 2004. Per capita GDP in Kazakstan, which has a population of 14.8 million, will likely increase by 8.3% this year. GDP is projected at 4.37 trillion tenges (US$29bn).

IMF advisers continuation of structural reforms
The right course to achieve these targets was already set out in the month before the new government assumed office. Kazakstan must maintain structural reforms and boost social sector spending, the International Monetary Fund said in a report following talks between the government and the global agency at the end of May, Interfax News Agency reported.
"Executive directors commended the authorities for Kazakstan's strong macroeconomic performance, which has been marked by fast and broad-based GDP growth, rapidly mounting international reserves and assets in the National fund of Kazakstan, and reductions in public sector external and internal debt," the report said.
Kazakstan has succeeded in pushing forward a number of reforms thanks to high global energy prices and timely changes. A credit upgrade (Moody's upgraded the country's credit rating to the minimum investment level of Baa3 last September) also helped raise Kazakstan's market confidence.

IMF report on Kazakstan
Officials must also focus more on the social sector and put into action more large-scale programmes in this area, the Fund said in the report. More financing for the health and education sectors would be appreciated, it added.
IMF said it is concerned about the relatively slow progress in structural reforms in recent years, after a very impressive start. What must be developed is the investment climate to ensure a diversified economy. Production should also increase, especially in the non-oil sector. Public administration and the judiciary need more reform.
"The important role the National Fund has played in building a protective buffer against unforeseen pressures on the budget and the balance of payments and recommends it be carefully safeguarded through greater transparency," the report read. The National Fund of Kazakstan currently has over US$2bn in its account.
"Kazakstan's strong external position has created a key opportunity for trade liberalisation," directors were quoted as saying. Considerable progress in this area must be seen, they added.

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AGRICULTURE

Kazakstan plans changes in grain exports, prime minister says

Kazakstan's wheat exports in 2002-2003 are expected to remain stable on the year at over 5m tonnes, Prime Minister Daniyal Akhmetov said on 15th July. Wheat accounts for the bulk of Kazak grain exports, Prime-TASS News Agency has reported.
Kazakstan plans to switch to international grain standards, based on protein content rather than gluten content, the current measure in use in Kazakstan, which has been in use since Soviet times. Akhmetov said the new standards would facilitate an increase in exports and getting better prices for the supplies.
Akhmetov said that wheat exports would increase not only to traditional buyers such as Russia or neighbouring Central Asian states, but also to Iran.
The country planned to build a new Caspian grain terminal capable of exporting 1m tonnes per year to Iran, he added. The capacity of the existing grain terminal in the Caspian seaport of Aktau, used for exports to Iran, amounts to around 500,000 t per year. 
Kazakstan is expected to harvest 12.5m tonnes of grain this year, down from 15.96m tonnes last year, according to a forecast by the agriculture ministry. 
Kazakstan's 2002-03 wheat exports are estimated at 5.5m tonnes, up from 3.8m in 2001-02.

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AUTOMOBILES

Russia's Kamaz to set up consortium in Kazakstan

Russia's largest heavy truck maker, Kamaz, is setting up an automobile consortium with a number of unspecified Kazak companies to assemble up to 1,200 Kamaz vehicles a year in Kazakstan, Kamaz' press service said on 1st July, Prime-TASS News Agency has reported. 
Kamaz and the Kazak government have signed an agreement to this effect.
The consortium also plans to begin production of parts in Kazakstan to be used by the assembly facilities and to set up maintenance and repair units capable of servicing up 1,000 vehicles a year, the press service said.

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BANKING

Kazakommertsbank announces sale 

Kazakommertsbank of Kazakstan has announced it has sold to Dutch bank ABN Amro NV a 29% stake in ABN Amro Bank Kazakstan and 28% of ABN Asset Management, a pension management firm, Interfax News Agency reported. The agreement between the two banks was signed on June 24th. The deal allows ABN Amro to increase its shares in ABN Amro Bank Kazakstan to 80%. The remaining shares are held by the International Finance Corp. ABN Asset Management is owned by ABN Amro Bank Kazakstan with 72% and ABN Amro NV with 28%. 

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ENERGY

KazMunaiGaz, SOCAR postpone pipeline talks indefinitely

A meeting between representatives from Kazak national oil company, KazMunaiGaz, and Azeri state oil company, SOCAR, to discuss the possibility of pumping Kazak oil through the Baku-Tbilisi-Ceyhan pipeline, planned for the first 10 days of July, has been postponed indefinitely, Kazak ambassador to Azerbaijan, Andar Shukputov, said recently.
He noted that the meeting has been postponed on the initiative of the Azerbaijani side. The reason for this is technical, and is connected with the summer holiday season. Interfax News Agency reported that representatives from KazMunaiGaz are ready to come at any time, but the meeting will definitely not take place in July.
During the talks in Baku, the sides will discuss a draft intergovernmental agreement between Azerbaijan and Kazakstan and a transit agreement, which will set down the commercial terms for transporting Kazak oil through the Baku-Tbilisi-Ceyhan pipeline.

Russian, Kazak companies agree on joint Caspian oil development

Russian oil major LUKoil and Kazakstan's national oil and gas company, KazMunaiGaz, have agreed the basic principles of cooperation in the development of Kazakstan's part of the Caspian Sea shelf, LUKoil said on 25th June, Prime-TASS News Agency has reported. The agreement was signed by the president of LUKoil's subsidiary LUKoil Overseas Holding Ltd., Andrey Kuzyayev, and KazMunaiGaz First Vice President Timur Kulibayev in Astana, andenvisages joint development of the Tyub-Karagan and Kazakstan areas of the shelf. The companies agreed to carry out a seismic survey of the areas and to drill two exploratory wells. The cost of the exploration phase is estimated to be US$90m and is to be financed by LUKoil Overseas.
Based on the results of exploration, the two companies plan to set up a joint venture. LUKoil will also contribute to the project by providing the necessary technological solutions. In buying supplies and services for the project, preference will be given to Kazak companies on the condition that on all other criteria they are on equal terms with third parties.

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FINANCIAL NEWS

IMF tells Kazakstan to continue structural reforms

Kazakstan must maintain structural reforms and boost social sector spending, the International Monetary Fund said in a report following talks between the government and the global agency at the end of May, Interfax News Agency reported.
"Executive directors commended the authorities for Kazakstan's strong macroeconomic performance, which has been marked by fast and broad-based GDP growth, rapidly mounting international reserves and assets in the National Fund of Kazakstan, and reductions in public sector external and internal debt," the report said.
Kazkastan has succeeded in pushing forward a number of reforms thanks to high global energy prices and timely changes. A credit upgrade (Moody's upgraded the country's credit rating to the minimum investment level of Baa3 last September) also helped raise Kazakstan's market confidence.
Officials must also focus more on the social sector and put into action more large-scale programmes in this area, the Fund said in the report. More financing for the health and education sectors would be appreciated, it added.
The IMF said it is concerned about the relatively slow progress in structural reforms in recent years, after a very impressive start. What must be developed is the investment climate to ensure a diversified economy. Production should also increase, especially in the non-oil sector. Public administration and the judiciary need more reform.

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MINERALS & METALS

Kazakstan reports higher steel but lower copper output

The Kazak state statistics agency said in its latest report that Kazakstan produced 2,028 million tonnes of steel in the first five months of this year, up 2 per cent year-on-year, Interfax News Agency reported. The agency was quoted as saying that figures were up 1 per cent to 3.773 million tonnes of ingots, other primary forms and semi-finished products made from stainless steel and other non-allotted steels. Carbon electric steel totalled 42,092 tonnes, accounting for a huge 458 per cent increase.
Flat iron and steel roll production amounted to 1.674 million tonnes, up to 0.4 per cent. The agency said that figures were up 43 per cent to 112,232 tonnes of tin-plate and tin-plated sheet and up 38 per cent to 279,042 tonnes of galvanised steel. Large- and small-diameter pipes production shrank 8 per cent to 18,833 tonnes. Carbon steel angles and sections production amounted to 6,244 tonnes, down 0.4 per cent.
Production climbed 13 per cent to 575,007 tonnes of ferroalloys, including 15 per cent to 402,337 tonnes of ferrochrome and 38 per cent to 77,530 tonnes of ferrosilicon manganese, Interfax said.
Ferrosilicon production dropped 3 per cent to 53,034 tonnes, while ferrosilicon chrome production reached 41,549 tonnes, down 14 per cent. Production was up 2 per cent to 1.675 million tonnes of conversion pig iron, foundry or mirror iron in ingots, casting slabs and other primary forms.
In another development, Kazakstan produced 171,195 tonnes of refined copper in the January-May period, 9 per cent less than in the same period of 2002. Blister copper production totalled 172,609 tonnes, down 7 per cent, the agency said. Figures were down 13 per cent to 4,126 tonnes of refined gold and 4 per cent to 344,606 tonnes of refined silver. Alumina production amounted to 585,818 tonnes, up 8 per cent, refined lead rose 13 per cent to 49,264 tonnes and unprocessed zinc increased 3 per cent to 114,645 tonnes.

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