Reality in Print, this adds validity to what several on this thread have speculated on many times:
Subject: A Little Exclusivity
Date: Tue, Feb 10, 1998 18:31 EST
From: Hajamax
Message-id: <19980210233100.SAA06510@ladder03.news.aol.com>
FOCUS-Kazakh PM sees borrowing, no oil co sales
By Larisa Kokovinets
AKMOLA, Feb 10 (Reuters) - Kazakhstan has suspended planned further privatisations in its energy sector but is committed to policies of stable economic growth, Prime Minister Nurlan Balgimbayev said on Tuesday.
Speaking at his first news briefing since his appointment last October, Balgimbayev said Kazakhstan planned to borrow about $260 million in foreign bonds in 1998 to cover the budget deficit.
"Kazakhstan has halted further privatisation of the oil and gas sector, in order to determine what we want, where we are and what we still have," Balgimbayev told the briefing in the new capital Akmola.
"To cover the budget deficit, we will carry out a placement on external markets of 20 billion tenge of government bonds."
The announcements highlighted the fears of some foreign investors of a slowdown in reform and in some of the trickier issues in the former Soviet republic's transition to a market economy with resulting greater emphasis on macroeconomic stabilisation.
Balgimbayev said gross domestic product rose two percent in 1997, and would grow by 2.5 percent in 1998.
"In 1998, we are going to improve macroeconomic indicators," said Balgimbayev. "Our government is not going to make empty promises...it will be a government of action and trust."
President Nursultan Nazarbayev had previously said GDP grew 2.5 percent in 1997 and would rise 3.5 percent in 1998. The state statistics committee has yet to release final figures.
"Progress in the macroeconomic situation has been rather impressive," said Tanju Yurukoglu, the World Bank's resident representative in the Central Asia republic.
He said Kazakhstan's tight monetary and fiscal policy had cut inflation to 11.2 percent in 1997 from 28.7 percent in 1996.
Adding to the rosy picture, Fitch IBCA last month raised Kazakhstan's long-term foreign currency rating to BB, citing GDP growth for the second year in a row, 12 percent growth in oil production in 1997 and 24 percent growth in natural gas output.
Along with much of Central Asia, Kazakhstan hopes to break dependence on Russian pipelines through a number of ambitious pipeline deals currently in progress, including the $2.0 billion Caspian Pipeline Consortium. Kazakhstan has also signed a $9.5 billion package of oil and pipeline deals with China.
But GDP growth in Kazakhstan, a steppeland five times the size of France boasting vast oil, gas and other mineral reserves has mostly been fuelled by increased oil output, economists say, with unemployment and chronic wage arrears rife in many sectors.
Balgimbayev said he would launch a number of initiatives to help the troubled labour market, including setting aside more than $200 million to support small businesses and allocating 30,000 microcredits.
Kazakhstan's wealth of natural resources and rapid foreign investment have helped to cushion the budget deficit, which preliminary official figures show was 3.4 percent of GDP in 1997. It had been targeted at 3.66 percent of GDP.
"That's a very manageable budget deficit," said Yurukoglu, adding that Kazakhstan had a low overall level of debt and comfortable oil reserves.
But Eric Fine, head of Morgan Stanley's Russia and East European debt research, saw the fiscal deficit widening to six percent of GDP in 1997 as a result of ambitious pension reform, poor tax collection and lagging restructuring.
Balgimbayev's announcement of the suspension of oil company privatisations threw into relief warnings by economists that the time has come for Kazakhstan to tackle its weak tax collection rates.
"As privatisation receipts run out they're going to have to do something about tax collection," said one Western economist. "Even if the oil comes they should collect taxes."
($ = 76.3809 tenge)
14:24 02-10-98
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