INTERVIEW-Kazakh budget problems
growing -reformer
07:15 a.m. Jul 02, 1998 Eastern
By Mike Collett-White
TASHKENT, Uzbekistan, July 2 (Reuters) - Growing pressure
on Kazakhstan's budget could soon affect its people, and a
weak opposition may look to exploit financial woes to its
advantage this autumn, a top reformer said.
''I think in the fall of 1998 the political battle will heat up,'' said
Akezhan Kazhegeldin, a former Kazakh prime minister now
advising the resource-rich Central Asian state's President
Nursultan Nazarbayev.
''Prices of raw materials which Kazakhstan exports fell, so
the economy gets less money, so does the budget,'' he told
Reuters in a telephone interview from Kazakhstan's financial
centre Almaty late on Wednesday. ''When there is no money,
this leads to social problems.''
Kazakhstan's economy relies heavily on exports of crude oil
and metals. Plunging world prices are estimated to have robbed
state coffers of hundreds of millions of dollars so far in 1998.
Pension reform this year has been costly, and privatisation
revenues have fallen behind targets as investors have shunned
emerging markets and the government dithers on what to sell.
The high cost of borrowing on capital markets has pushed the
government towards austerity measures rather than plugging
gaps through Eurobond issues.
Kazhegeldin, who flung the doors open to foreign investment
during his term in office from 1994 to 1997, said Kazakhstan
should continue along that economic path.
''We need to work actively with investors,'' he said. ''We need
to make the system transparent, but the main thing is for
stability. Investors must trust that the legislative system here
ensures stability.''
Nazarbayev has blamed Kazhegeldin's government for past
privatisation failures. Rows with large investors have dented
confidence in Kazakhstan, Kazhegeldin said.
''Scandals with previous investors mean that investment in
Kazakhstan is being delayed,'' he said.
Kazakhstan has already won tens of billions of dollars in
promised income from firms tapping its huge oil and gas
reserves. Nazarbayev has halted further energy sell-offs, saying
he wants to preserve some wealth for future generations.
The government had pinned its hopes this year on
minority stakes in 13 so-called ''blue-chip'' , in the
hope that this would revive the ailing stock .
The original list has been reduced to five or six firms,
comprising telecoms, oil, mining and banking .
Kazhegeldin said the stakes may not be sold at all this year.
''Investors have waited for a year so far (for the sales), and this
has undermined their trust,'' he said. ''I think that enthusiasm
for the sale of these stakes this year is not high.''
Kazhegeldin, one of Kazakhstan's most popular public
figures despite being removed from the government in October
last year, has been tipped as a future presidential candidate.
Russian news agencies reported recently he may form a party to
boost opposition to Nazarbayev, which is pitifully weak.
While agreeing that a stronger opposition was needed,
Kazhegeldin was tightlipped about his own intentions.
Nazarbayev himself has paid lip service to the need for a
stronger opposition. But Kazhegeldin was less sure that the
president, who enjoys sweeping executive powers, really
wanted to be challenged seriously.
''I think that up until now there has never been an opposition,
and I think that now he does not want one,'' he said.
Copyright 1998 Reuters Limited. All rights reserve
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Klaas de Rooy
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