Kazakh leader orders govt to improve economy
01:06 p.m Jul 10, 1998 Eastern
By Dmitry Solovyov
ASTANA, July 10 (Reuters) - Kazakhstan President
Nursultan Nazarbayev urged his government on Friday to
take quick steps to improve the economy, stressing his
words would be the last warning for the young cabinet.
Presiding over a cabinet meeting on the economic results
of the first half of the year, Nazarbayev said that despite
macroeconomic stability, Kazakhstan's economic
growth during the first half of 1998 had slowed.
He said gross domestic product (GDP) in January to May
had risen by 3.3 percent, but excluding booming
construction in the country's new capital of Astana, it
would be only 1.2 percent. No GDP data for the first half
of the year was available.
The central bank said earlier this week that Kazakhstan
was unlikely to achieve the targeted three percent growth
of GDP, following a rise of two percent last year and 1.1
percent in 1996.
Prime Minister Nurlan Balgimbayev reported to the
President that the country's economic slowdown was due
to the international financial crisis, leading to lower prices
of oil, gas and metals, Kazakhstan's major exports.
''Many Asian states have already devalued their
currencies. This means that for our exports these markets
will be more limited, and on the other hand our market
will become more open for exporters from these states,''
Balgimbayev said.
He said the financial crisis in Russia, a major political and
trading partner, was another headache for the Kazakh
government.
''In case of a sharp fall of the Russian rouble rate...
Kazakhstan will not escape serious hardships,'' he said.
Nazarbayev, visibly irritated by the routine report, said
that other industries were also in decline. He said machine
building had shrunk by 65 percent in January to June,
while the chemical industry had declined by 42 percent.
''And at the same time we declare that we care...about the
real economic sector!'' thundered the President,
addressing the government.
''Probably I am warning you for the last time,'' he told
the government, appointed nine months ago after the
resignation of the cabinet of reformist Prime Minister
Akezhan Kazhegeldin.
Some media had reported that Nazarbayev, who tolerates
little opposition in his resource-rich Central Asian state of
16 million people, might sack the fledgling government,
or at least some key ministers at Friday's meeting.
However, the iron-fisted leader confined himself to
ordering a number of urgent measures to be taken by the
cabinet.
''We need to diversify the economy,'' he said, demanding
that the cabinet present by September 1 a programme
aimed at easing dependence on world energy prices.
He said the government had also to work out by August
15 a concrete programme of controls over the financial
activities of national companies and would also freeze
tariffs of natural energy and transportation monopolies
until next year.
Nazarbayev said the state budget would cut spending and
demand that all ministers and regional heads control their
expenditure.
''If we do not live according to our disposable means, we
will destroy the whole financial system of the country,''
he said.
Balgimbayev pledged the government would eliminate
import tariffs on raw materials and equipment which are
not produced in Kazakhstan, lower transport tariffs and
value added tax and regulate the prices of local natural
monopolies.
He said the government would strictly control contracts
with foreign investors and annul those contracts which
were not respected. He vowed to make ministers and
regional heads personally responsible for spending budget
cash.
The government plans to cut by September 1 the number
of workers employed in state bureaucracy, but gave no
details.
Describing other austerity measures, Balgimbayev said the
government would control how much electricity, heat and
communications state institutions used.
The government would also be more active in resorting to
bankruptcy and liquidation of insolvent enterprises.
''Around 100 companies have already been announced
bankrupt and liquidated, and we plan to impose the same
procedures on some 1,000 companies by the year-end,''
Balgimbayev said.
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